Auto Credit Express Blog
October 29, 2008
AmeriCredit Announces Quarterly Results
This week, the Fort Worth-based subprime lender released the results of its operations for the first quarter. As expected, the lender took a hit from July through September of this year.
Originations Down, Loan Loss Provisions and Charge-Offs Up
Here at Auto Credit Express, we want our dealers to be aware of the past performance of the various subprime lenders as well as what to expect from them in the future. This week, Fort Worth-based AmeriCredit released its 1st quarter results and participated in a conference call to explain those results and project what it plans on doing for the rest of the year.
AmeriCredit continues to cut back on loan originations. During the September quarter, loan originations stood at $579 million, down from $780 million in the June quarter and down from almost $2.4 billion in the September quarter of 2007. In addition, during their conference call, Dan Berce, President and CEO of AmeriCredit, projected that loan originations for the upcoming December quarter would be reduced to $300 million or less, depending upon conditions encountered in that quarter.
As expected, loan losses have increased year-over-year and the required funds to cover those losses have also been increased – from $244.6 million in 2007 to $$274.8 million in 2008.
Here is the press release from AmeriCredit:
AmeriCredit Reports First Quarter Operating Results
* 1st Quarter net loss of $1.7 million, $0.01 per share
* Pre-tax earnings of $412,000
* Allowance for loan losses increased to 6.8% of outstanding receivables
FORT WORTH, Texas Oct. 27, 2008–AMERICREDIT CORP. (NYSE: ACF) today announced a net loss of $1.7 million, or $0.01 per share, for its fiscal first quarter ended September 30, 2008. AmeriCredit reported net income of $61.8 million, or $0.49 per share, for the same period a year earlier.
The allowance for loan losses as a percentage of finance receivables increased to 6.8% at September 30, 2008, from 6.3% at June 30, 2008.
Originations were $579.3 million for the quarter ended September 30, 2008, compared to $2.4 billion for the same quarter last fiscal year. Finance receivables totaled $14.1 billion at September 30, 2008, compared to $16.4 billion at September 30, 2007.
Annualized net charge-offs totaled 7.3% of average finance receivables for the quarter ended September 30, 2008, compared to 5.4% for the quarter ended September 30, 2007.
Finance receivables 31-to-60 days delinquent were 7.4% of the portfolio at September 30, 2008, compared to 5.5% at September 30, 2007. Accounts more than 60 days delinquent were 3.6% of the portfolio, compared to 2.6% a year ago.
Unrestricted cash was $243.8 million at September 30, 2008, excluding $112.3 million of investment in The Reserve Primary Money Market Fund, which has been reclassified to Investment in money market fund due to the fund’s temporary suspension of distributions. The Company has additional liquidity of approximately $150 million from borrowing capacity on unpledged eligible receivables at September 30, 2008. During the September 2008 quarter, AmeriCredit retired $114.7 million of its 1.75% convertible notes. Book value was $16.49 per share at September 30, 2008.
AmeriCredit will host a conference call for analysts and investors today at 5:30 p.m. Eastern time. For a live Internet broadcast of this conference call, please go to the Company’s Web site to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
About AmeriCredit
AmeriCredit Corp. is a leading independent automobile finance company that provides financing solutions indirectly through auto dealers across the United States. AmeriCredit has over one million customers and approximately $14 billion in auto receivables. The Company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit www.americredit.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company’s annual report on Form 10-K for the year ended June 30, 2008. Such risks include - but are not limited to - variable economic conditions, adverse portfolio performance, volatile wholesale vehicle values, reliance on warehouse financing and capital markets, the ability to continue to securitize its loan portfolio, the continued availability of credit enhancement for its securitization transactions on acceptable terms, fluctuating interest rates, increased competition, regulatory changes, the high degree of risk associated with subprime borrowers, and exposure to litigation. These forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially. It is advisable not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to, and does not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.
The Bottom Line
Like many other lenders tied to the automobile market, AmeriCredit continues to be squeezed by a deteriorating credit market as well as the higher costs of portfolio securitization. As retail finance managers, you can expect the Texas-based lender to continue to tighten its loan parameters as it seeks to lower its loan losses and raise the creditworthiness standards of its loan portfolio.
