-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HaY3NXbcyEyNBHEtEq/xj64mnuqFkCnuIOfkAMhxR18h1K4iXm8lOqggo5gwj1Me KMkALLf6UVRgnfvx7wNcLw== 0000354964-98-000003.txt : 19980202 0000354964-98-000003.hdr.sgml : 19980202 ACCESSION NUMBER: 0000354964-98-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980121 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980130 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOUSEHOLD INTERNATIONAL INC CENTRAL INDEX KEY: 0000354964 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 363121988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08198 FILM NUMBER: 98518597 BUSINESS ADDRESS: STREET 1: 2700 SANDERS RD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 BUSINESS PHONE: 8475645000 MAIL ADDRESS: STREET 1: 2700 SANDERS ROAD CITY: PROSPECT HEIGHTS STATE: IL ZIP: 60070 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: January 21, 1998 ---------------- HOUSEHOLD INTERNATIONAL, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 1-8198 36-3121988 - -------------------------------------------------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation Number) 2700 Sanders Road, Prospect Heights, Illinois 60070 - --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 847/564-5000 ------------ 2 Item 5. Other Events Press release pertaining to the financial results of Household International, Inc., for the quarter and year ended December 31, 1997. Said release is filed as an exhibit hereto. Item 7. Financial Statements and Exhibits (a) Financial statements of businesses acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. No. Exhibit --- ------- 27 Financial Data Schedule. 99 Press release titled "Household EPS Grows More Than 20 Percent For 6th Consecutive Year" dated January 21, 1998 3 SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HOUSEHOLD INTERNATIONAL, INC. ---------------------------- (Registrant) By: /s/ Susan E. Casey ------------------- Susan E. Casey Assistant Secretary Dated: January 30, 1998 ---------------- U:\LAW\EDGAR\I8K198.WP EX-27 2
5 THE FOLLOWING SUMMARY FINANCIAL INFORMATION OF THE COMPANY AND ITS SUBSIDIARIES IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND FINANCIAL STATEMENTS PREVIOUSLY FILED WITH THE SECURITIES & EXCHANGE COMMISSION. 1,000 YEAR DEC-31-1997 DEC-31-1997 280,400 2,285,600 23,811,000 (1,944,500) 0 0 721,700 (412,300) 30,302,600 0 14,849,000 0 150,000 124,300 4,566,900 30,302,600 0 5,503,100 0 1,928,500 0 1,042,000 1,503,400 1,029,200 342,600 686,600 0 0 0 686,600 6.59 6.50 FINANCIAL STATEMENTS OF THE COMPANY WERE PREPARED IN ACCORDANCE WITH FINANCIAL INSTITUTION INDUSTRY STANDARDS. ACCORDINGLY, THE COMPANY'S BALANCE SHEETS WERE NON-CLASSIFIED. REPRESENTS BASIC EPS COMPUTED IN ACCORDANCE WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128, "EARNINGS PER SHARE."
EX-99 3 1 For Release: Immediately Contact: Craig A. Streem Vice President - Investor Relations 847.564.6053 Celeste M. Murphy Director - Investor Relations 847.564.7568 Household EPS Grows More Than 20 Percent For 6th Consecutive Year 1997 Net Income Up 27 Percent To $686.6 Million; EPS Up 22 Percent To $6.50 Q4 Net Income Up 33 Percent To $217.6 Million; EPS Up 22 Percent To $1.98 On Greater Number Of Shares Outstanding Prospect Heights, IL, January 21, 1998 -- Household International (NYSE: HI) today reported all-time record net income and earnings per share for the fourth quarter and year ended December 31, 1997. Full-year earnings per share of $6.50 rose 22 percent and net income increased 27 percent to $686.6 million. Quarterly earnings per share totaled $1.98, a 22 percent increase from $1.62 for the fourth quarter of 1996, on a greater number of average shares outstanding. Net income rose 33 percent to an all-time quarterly record of $217.6 million, compared with $163.6 million a year earlier. William F. Aldinger, Household's chairman and chief executive officer, said, "Household achieved another year of earnings per share growth in excess of 20 percent--the sixth consecutive year that we've done so. We grew revenues 18 percent and kept expenses essentially flat. We absorbed increased chargeoffs consistent with industry-wide trends and further strengthened our credit loss reserves. We also improved our return on managed assets. Our return on equity exceeded 18 percent, even though we significantly increased our capital levels. Overall, it was a terrific year." Mr. Aldinger added, "1997 was not only a record year, it was a year of investing in the long-term growth of our company. We acquired the consumer finance business of Transamerica Corporation and ACC Consumer Finance, an industry leader in non-prime auto finance. We expect both acquisitions to contribute to another record year in 1998." 2 Compared to the prior year, Household's managed portfolio of core receivables grew 8 percent, driven by increases in the home equity portfolio. Adjusted for sales of non-strategic portfolios, year-over-year growth was 11 percent. In the fourth quarter, core receivables grew three percent, and excluding portfolio sales, were up five percent. MasterCard/Visa receivables increased 8 percent in the fourth quarter. The company's quarterly managed net interest margin expanded to 7.60 percent from 7.31 percent a year ago and 7.56 percent in the third quarter. For the full year, Household's managed net interest margin widened to 7.48 percent, up from 7.07 percent in 1996. The wider margin in 1997 reflects a shift in portfolio mix toward higher yielding products and improved pricing. Operating expenses totaled $470 million in the fourth quarter, up 12 percent from $419 million of a year ago. Most of this increase was due to the expanded domestic consumer finance and auto businesses as well as higher marketing expenses in the MasterCard/Visa business. Household's normalized managed efficiency ratio for the year improved to 36 percent from the 1996 level of 41 percent. Annualized net chargeoffs for the fourth quarter dropped to 4.50 percent of average managed consumer receivables compared to 4.63 percent in the prior quarter. In the year-ago quarter, the chargeoff ratio was 3.59 percent. The sequential quarter drop was driven by an improved MasterCard/Visa chargeoff ratio, which declined to 5.74 percent from 6.42 percent in the third quarter. The full-year consumer chargeoff ratio increased from 3.35 percent in 1996 to 4.47 percent in 1997. Personal bankruptcies continued to be a significant factor in the level of chargeoffs. At December 31, two-months-and-over consumer delinquency was 4.82 percent of managed consumer receivables, compared with 4.62 percent at the end of the third quarter and 4.15 percent a year ago. The company increased credit loss reserves by nearly $350 million during 1997. The ratio of reserves-to-managed receivables was 4.29 percent at year end compared to 3.75 percent a year ago and 4.10 percent at September 30, 1997. Total reserves to total nonperforming loans were 117 percent, compared to 119 percent a year ago. Equity-to-managed assets improved to 9.3 percent at year end from 6.9 percent a year ago. For 1997, return on equity was 18.2 percent, and return on managed assets improved to 1.39 percent from 1.17 percent in 1996. Household International, through its subsidiaries, is a leading provider of consumer finance and credit card products in the United States, Canada and the United Kingdom. HFC, one of Household's core businesses, is the oldest consumer finance company in the United States. Additionally, Household is also one of the nation's largest issuers of private-label and general purpose credit cards. Its principal card products include the GM Card and the AFL-CIO's Union Privilege card. # # # 3 December 31, 1997
Quarterly Financial Highlights - ------------------------------------------------------------------------------------------------------------------- Summary Managed Income Statement Three Months Ended % Change from Prior ($ millions) 12/31/97 9/30/97 12/31/96 Qtr. Year - ------------------------------------------------------------------------------------------------------------------- Managed-basis net interest margin and other revenues $1,372.9 $1,280.5 $1,108.4 7.2% 23.9% Managed-basis provision for credit losses 589.9 552.4 440.5 6.8 33.9 Operating expenses 470.0 442.7 419.1 6.2 12.1 Income taxes 95.4 98.2 85.2 (2.9) 12.0 - ------------------------------------------------------------------------------------------------------------------- Net Income $ 217.6 $ 187.2 $ 163.6 16.2% 33.0% =================================================================================================================== Common Stock Data - ------------------------------------------------------------------------------------------------------------------- Basis earnings per common share $ 2.00 $ 1.73 $ 1.64 15.6% 22.0% Diluted earnings per common share 1.98 1.70 1.62 16.5 22.2 Average common and equivalent shares (millions) 108.7 108.4 98.4 0.3 10.5 Common stock price High $ 129.63 $ 130.00 $ 98.13 (0.3) 32.1 Low 108.38 108.44 82.50 (0.1) 31.4 Period end 127.63 113.19 92.25 12.8 38.4 - ------------------------------------------------------------------------------------------------------------------- Common shares outstanding at period end (millions) 107.2 106.9 97.1 0.3 10.4 Dividends declared per common share $ 0.42 $ 0.42 $ 0.39 - 7.7 Book value per common share 42.13 40.38 30.30 4.3 39.0 =================================================================================================================== Key Ratios - ------------------------------------------------------------------------------------------------------------------- Return on average common shareholders' equity 19.4% 17.4% 22.2% 11.5% (12.6)% Return on average owned assets 2.78 2.37 2.13 17.3 30.5 Return on average managed assets 1.69 1.47 1.36 15.0 24.3 Managed efficiency ratio, normalized 34.6 35.1 38.8 (1.4) (10.8) Managed net interest margin 7.60 7.56 7.31 0.5 4.0 Total shareholders' equity as a percent of managed assets 9.33 9.23 6.90 1.1 35.2 ===================================================================================================================
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Twelve Months Financial Highlights - ---------------------------------------------------------------------------------------------------- Summary Managed Income Statement Twelve Months Ended % Change from ($ millions) 12/31/97 12/31/96 Prior Year - ---------------------------------------------------------------------------------------------------- Managed-basis net interest margin and other revenues $4,935.4 $4,190.5 17.8% Managed-basis provision for credit losses 2,162.5 1,641.0 31.8 Operating expenses 1,743.7 1,727.2 1.0 Income taxes 342.6 283.7 20.8 - ---------------------------------------------------------------------------------------------------- Net Income $ 686.6 $ 538.6 27.5% ==================================================================================================== Common Stock Data - ---------------------------------------------------------------------------------------------------- Basic earnings per common share $ 6.59 $ 5.37 22.7% Diluted earnings per common share 6.50 5.31 22.4 Average common and equivalent shares (millions) 103.8 98.3 5.6 Common stock price High 130.00 98.13 32.5 Low 78.63 52.00 51.2 Dividends declared per common share 1.62 1.46 11.0 ==================================================================================================== Key Ratios - ---------------------------------------------------------------------------------------------------- Return on average common shareholders' equity 18.2% 18.9% (3.7)% Return on average owned assets 2.26 1.82 24.2 Return on average managed assets 1.39 1.17 18.8 Managed efficiency ratio, normalized 36.0 40.8 (11.8) Managed net interest margin 7.48 7.07 5.8 ==================================================================================================== To aid analysis, net interest margin and other revenues and provision for credit losses are presented on a pro forma managed basis as if receivables securitized and sold with limited recourse were held in the portfolio. Policyholders' benefits have been netted against other revenues. Includes managed-basis net chargeoffs of $505.1 million in the fourth quarter of 1997, $507.0 million in the third quarter of 1997 and $377.1 million in the fourth quarter of 1996 and $1,916.4 million in 1997 and $1,299.8 million in 1996. The company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" (FAS No. 128), effective for financial statements issued for periods ending after December 15, 1997. Under FAS No. 128, basic earnings per common share is computed excluding dilution caused by common stock equivalents such as stock options. Diluted earnings per common share includes the effect of common stock equivalents. Managed net interest margin as a percent of average managed interest-earning assets for 1997 and 1996 excludes temporary investments for pre-funding acquisitions in each year, and, in 1996, for the sale of the company's remaining consumer banking operations. Including the impact of these temporary investments, managed net interest margin was 7.46 and 6.98 percent for 1997 and 1996, respectively.
5
Consolidated Statements of Income - Owned Basis - ------------------------------------------------------------------------------------------------------------------------ % Change Three Months Ended from Prior Twelve Months Ended ($ millions) 12/31/97 9/30/97 12/31/96 Qtr. Year 12/31/97 12/31/96 % Change - ------------------------------------------------------------------------------------------------------------------------ Finance income $785.7 $790.0 $813.5 (0.5)% (3.4)% $3,057.2 $2,949.9 3.6 % Other interest income 6.6 6.2 9.2 6.5 (28.3) 36.8 80.6 (54.3) Interest expense 387.3 389.2 398.8 (0.5) (2.9) 1,503.4 1,520.6 (1.1) - ----------------------------------------------------------------------------------------------------------------------- Net interest margin 405.0 407.0 423.9 (0.5) (4.5) 1,590.6 1,509.9 5.3 Provision for credit losses on owned receivables 239.2 257.8 222.3 (7.2) 7.6 1,042.0 759.6 37.2 - ----------------------------------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 165.8 149.2 201.6 11.1 (17.8) 548.6 750.3 (26.9) - ----------------------------------------------------------------------------------------------------------------------- Securitization income 359.1 366.5 307.1 (2.0) 16.9 1,400.6 1,149.0 21.9 Insurance revenues 72.9 69.6 67.5 4.7 8.0 276.4 253.4 9.1 Investment income 34.5 32.9 25.2 4.9 36.9 129.5 153.2 (15.5) Fee income 149.8 108.7 75.0 37.8 99.7 413.3 240.3 72.0 Other income 42.8 48.8 37.0 (12.3) 15.7 189.3 232.4 (18.5) - ----------------------------------------------------------------------------------------------------------------------- Total other revenues 659.1 626.5 511.8 5.2 28.8 2,409.1 2,028.3 18.8 - ----------------------------------------------------------------------------------------------------------------------- Salaries and fringe benefits 167.0 168.7 154.5 (1.0) 8.1 639.5 564.3 13.3 Occupancy and equipment expense 51.4 52.5 46.2 (2.1) 11.3 207.9 209.8 (0.9) Other marketing expenses 95.9 86.5 86.9 10.9 10.4 337.7 354.4 (4.7) Other servicing and administrative expenses 113.6 92.6 94.8 22.7 19.8 400.2 455.0 (12.0) Amortization of acquired intangibles and goodwill 42.1 42.4 36.7 (0.7) 14.7 158.4 143.7 10.2 Policyholders' benefits 41.9 47.6 45.5 (12.0) (7.9) 184.8 229.1 (19.3) - ----------------------------------------------------------------------------------------------------------------------- Total costs and expenses 511.9 490.3 464.6 4.4 10.2 1,928.5 1,956.3 (1.4) - ----------------------------------------------------------------------------------------------------------------------- Income before income taxes 313.0 285.4 248.8 9.7 25.8 1,029.2 822.3 25.2 Income taxes 95.4 98.2 85.2 (2.9) 12.0 342.6 283.7 20.8 - ----------------------------------------------------------------------------------------------------------------------- Net Income 217.6 187.2 163.6 16.2 33.0 686.6 538.6 27.5 - ----------------------------------------------------------------------------------------------------------------------- Preferred dividends (2.8) (2.9) (4.2) (3.4) (33.3) (11.8) (16.7) (29.3) - ----------------------------------------------------------------------------------------------------------------------- Earnings available to common shareholders $214.8 $184.3 $159.4 16.5% 34.8% $ 674.8 $ 521.9 29.3% ======================================================================================================================= Effective tax rate 30.5% 34.4% 34.2% (11.3)% (10.8)% 33.3% 34.5% (3.5)% - -----------------------------------------------------------------------------------------------------------------------
Balance Sheet Data - ---------------------------------------------------------------------------------------------- ($ millions) 12/31/97 9/30/97 12/31/96 - ---------------------------------------------------------------------------------------------- Owned assets $30,302.6 $30,650.8 $29,594.5 Managed assets 51,868.4 50,289.2 48,120.9 Managed receivables 45,376.8 44,083.4 42,593.4 Debt 22,718.9 23,201.5 23,595.2 Trust originated preferred securities 175.0 175.0 175.0 Preferred stock 150.0 150.0 205.0 Common shareholders' equity 4,516.2 4,316.1 2,941.2 Total shareholders' equity as a percent of managed assets 9.33% 9.23% 6.90% ==============================================================================================
6 Consolidated Statements of Income - Managed Basis - ------------------------------------------------- Securitizations and sales of consumer receivables are an important source of liquidity and capital management for the company. The company continues to service the securitized receivables after such receivables are sold, and retains a limited recourse obligation. Securitizations impact the classification of revenues and expenses in the income statement. Net interest margin, non-interest income such as interchange fee income and provision for credit losses related to receivables sold are reported net in securitization income. Managed Basis - -------------
% Change Three months ended from Prior ($ millions) 12/31/97 9/30/97 12/31/96 Qtr. Year - ----------------------------------------------------------------------------------------------------------------------- Finance income $ 1,559.0 13.82% $ 1,532.8 13.71% $ 1,444.1 13.49% 1.7 % 8.0 % Other interest income 6.6 6.66 6.2 6.65 9.2 5.58 6.5 (28.3) Interest expense 704.0 6.21 689.9 6.14 658.7 6.06 2.0 6.9 - ----------------------------------------------------------------------------------------------------------------------- Net interest margin 861.6 7.60% 849.1 7.56% 794.6 7.31% 1.5 8.4 Provision for credit losses 589.9 552.4 440.5 6.8 33.9 - ----------------------------------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 271.7 296.7 354.1 (8.4) (23.3) - ----------------------------------------------------------------------------------------------------------------------- Insurance revenues 72.9 69.6 67.5 4.7 8.0 Investment income 34.5 32.9 25.2 4.9 36.9 Fee income 403.0 327.7 229.6 23.0 75.5 Other income 42.8 48.8 37.0 (12.3) 15.7 - ----------------------------------------------------------------------------------------------------------------------- Total other revenues 553.2 479.0 359.3 15.5 54.0 - ----------------------------------------------------------------------------------------------------------------------- Total costs and expenses 511.9 490.3 464.6 4.4 10.2 - ----------------------------------------------------------------------------------------------------------------------- Income before income taxes 313.0 285.4 248.8 9.7 25.8 Income taxes 95.4 98.2 85.2 (2.9) 12.0 - ----------------------------------------------------------------------------------------------------------------------- Net income $ 217.6 $ 187.2 $ 163.6 16.2 % 33.0 % ======================================================================================================================= Average managed receivables: Home equity $10,995.0 $11,119.2 $ 8,453.9 (1.1)% 30.1 % Auto finance 697.0 - - - - MasterCard/Visa 17,529.5 17,345.1 18,044.1 1.1 (2.9) Private label 5,644.8 5,671.2 5,292.8 (0.5) 6.7 Other unsecured 8,850.8 9,079.9 8,658.8 (2.5) 2.2 - ----------------------------------------------------------------------------------------------------------------------- Core products 43,717.1 43,215.4 40,449.6 1.2 8.1 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 440.6 496.9 1,375.6 (11.3) (68.0) Commercial 819.4 842.3 1,001.3 (2.7) (18.2) - ----------------------------------------------------------------------------------------------------------------------- Total 44,977.1 44,554.6 42,826.5 0.9 5.0 Average noninsurance investments 396.6 372.7 659.0 6.4 (39.8) - ----------------------------------------------------------------------------------------------------------------------- Average managed interest- earning assets $45,373.7 $44,927.3 $43,485.5 1.0 % 4.3 % =======================================================================================================================
7 Consolidated Statement of Income - Managed Basis (continued) - ------------------------------------------------------------
12/31/97 12/31/96 % Change - --------------------------------------------------------------------------------------------- Finance income $ 5,935.4 13.68% $ 5,273.7 13.30% 12.5 % Other interest income 36.8 6.04 80.6 5.69 (54.3) Interest expense 2,691.7 6.12 2,489.8 6.06 8.1 - --------------------------------------------------------------------------------------------- Net interest margin 3,280.5 7.48% 2,864.5 7.07% 14.5 Provision for credit losses 2,162.5 1,641.0 31.8 - --------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 1,118.0 1,223.5 (8.6) - --------------------------------------------------------------------------------------------- Insurance revenues 276.4 253.4 9.1 Investment income 129.5 153.2 (15.5) Fee income 1,244.5 916.1 35.8 Other income 189.3 232.4 (18.5) - --------------------------------------------------------------------------------------------- Total other revenues 1,839.7 1,555.1 18.3 - --------------------------------------------------------------------------------------------- Total costs and expenses 1,928.5 1,956.3 (1.4) - --------------------------------------------------------------------------------------------- Income before income taxes 1,029.2 822.3 25.2 Income taxes 342.6 283.7 20.8 - --------------------------------------------------------------------------------------------- Net income $ 686.6 $ 538.6 27.5 % ============================================================================================= Average managed receivables: Home equity $ 9,576.9 $ 8,616.7 11.1 % Auto finance 282.6 - - MasterCard/Visa 17,669.1 15,750.7 12.2 Private label 5,671.4 4,822.2 17.6 Other unsecured 8,754.2 7,615.4 15.0 - --------------------------------------------------------------------------------------------- Core products 41,954.2 36,805.0 14.0 - --------------------------------------------------------------------------------------------- First mortgage 565.8 1,717.8 (67.1) Commercial 867.1 1,116.9 (22.4) - --------------------------------------------------------------------------------------------- Total 43,387.1 39,639.7 9.5 Average noninsurance investments 609.1 1,417.4 (57.0) - --------------------------------------------------------------------------------------------- Average managed interest- earning assets $43,996.2 $41,057.1 7.2% ============================================================================================== % Columns: comparison to appropriate earning assets, annualized. Managed net interest margin as a percent of average managed interest-earning assets for 1997 and 1996 excludes temporary investments for pre-funding acquisitions in each year, and, in 1996, for the sale of the company's remaining consumer banking operations. Including the impact of these temporary investments, managed net interest margin was 7.46 and 6.98 percent for 1997 and 1996, respectively. Prior to the quarter ended December 31, 1997, auto finance receivables were not significant and were included in other unsecured receivables. MasterCard and Visa are registered trademarks of MasterCard International, Incorporated and VISA USA Inc., respectively.
8
Receivables Analysis - ----------------------------------------------------------------------------------------------------------------------- % Change from Prior Managed Portfolio ($ millions) 12/31/97 9/30/97 12/31/96 Qtr. Year - ----------------------------------------------------------------------------------------------------------------------- The combination of receivables owned and receivables which have been sold to public and private investors with limited recourse. Home equity $11,059.1 $10,976.8 $ 7,985.4 0.7 % 38.5 % Auto finance 883.4 - - - - MasterCard/Visa 18,264.3 16,878.8 18,737.4 8.2 (2.5) Private label 5,707.9 5,605.1 5,587.0 1.8 2.2 Other unsecured 8,291.3 9,303.5 8,620.2 (10.9) (3.8) - ----------------------------------------------------------------------------------------------------------------------- Core products 44,206.0 42,764.2 40,930.0 3.4 8.0 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 396.6 482.9 725.6 (17.9) (45.3) Commercial 774.2 836.3 937.8 (7.4) (17.4) - ----------------------------------------------------------------------------------------------------------------------- Managed portfolio $45,376.8 $44,083.4 $42,593.4 2.9% 6.5% ======================================================================================================================= Receivables (% of Managed Portfolio) - ----------------------------------------------------------------------------------------------------------------------- Home equity 24.4% 24.9% 18.7% Auto finance 1.9 - - MasterCard/Visa 40.3 38.3 44.0 Private label 12.6 12.7 13.1 Other unsecured 18.2 21.1 20.3 - ----------------------------------------------------------------------------------------------------------------------- Core products 97.4 97.0 96.1 - ----------------------------------------------------------------------------------------------------------------------- First mortgage 0.9 1.1 1.7 Commercial 1.7 1.9 2.2 - ----------------------------------------------------------------------------------------------------------------------- Total 100.0% 100.0% 100.0% ======================================================================================================================= Receivables ($ millions) - ----------------------------------------------------------------------------------------------------------------------- First mortgage $ 396.6 $ 482.9 $ 725.6 (17.9)% (45.3)% Home equity 7,933.2 7,605.0 3,647.9 4.3 100+ Auto finance 487.5 - - - - MasterCard/Visa 5,927.3 5,668.6 8,587.7 4.6 (31.0) Private label 4,682.9 5,230.1 5,070.0 (10.5) (7.6) Other unsecured 3,609.3 4,622.1 5,098.0 (21.9) (29.2) Commercial 774.2 836.3 937.8 (7.4) (17.4) - ----------------------------------------------------------------------------------------------------------------------- Total owned receivables 23,811.0 24,445.0 24,067.0 (2.6) (1.1) - ----------------------------------------------------------------------------------------------------------------------- Accrued finance charges 377.5 414.9 397.6 (9.0) (5.1) Credit loss reserve for owned receivables (1,082.2) (1,062.7) (900.2) 1.8 20.2 Unearned credit insurance premiums and claims reserves (228.4) (216.2) (184.6) 5.6 23.7 Amounts due and deferred from receivable sales 1,847.1 1,632.5 1,561.0 13.1 18.3 Reserve for receivables serviced with limited recourse (862.3) (746.5) (696.0) 15.5 23.9 - ----------------------------------------------------------------------------------------------------------------------- Total owned receivables, net 23,862.7 24,467.0 24,244.8 (2.5) (1.6) - ----------------------------------------------------------------------------------------------------------------------- Receivables serviced with limited recourse: Home equity 3,125.9 3,371.8 4,337.5 (7.3) (27.9) Auto finance 395.9 - - - - MasterCard/Visa 12,337.0 11,210.2 10,149.7 10.1 21.6 Private label 1,025.0 375.0 517.0 100+ 98.3 Other unsecured 4,682.0 4,681.4 3,522.2 - 32.9 - ----------------------------------------------------------------------------------------------------------------------- Total receivables serviced with limited recourse 21,565.8 19,638.4 18,526.4 9.8 16.4 - ----------------------------------------------------------------------------------------------------------------------- Total managed receivables, net $45,428.5 $44,105.4 $42,771.2 3.0% 6.2% ======================================================================================================================= Prior to the quarter ended December 31, 1997, auto finance receivables were not significant and were included in other unsecured receivables. Auto finance receivables were previously securitized by ACC Consumer Finance Corporation before its acquisition in October 1997. /TABLE 9
Credit Quality/Credit Loss Reserves - ----------------------------------------------------------------------------------------------------------------- ($ millions) 12/31/97 9/30/97 12/31/96 - ----------------------------------------------------------------------------------------------------------------- Two-Months-and-Over Contractual Delinquency As a percent of managed consumer receivables, excludes commercial. - ----------------------------------------------------------------------------------------------------------------- First mortgage 10.35 % 9.27 % 9.49 % Home equity 4.17 3.41 3.96 Auto finance 2.09 - - MasterCard/Visa 3.05 3.17 2.71 Private label 6.75 6.54 5.50 Other unsecured 8.30 7.28 6.13 - ----------------------------------------------------------------------------------------------------------------- Total 4.82 % 4.62 % 4.15 % ================================================================================================================= Quarter-to-Date Chargeoffs, Net of Recoveries As a percent of average managed consumer receivables, annualized, excludes commercial. - ----------------------------------------------------------------------------------------------------------------- First mortgage 1.29 % 1.21 % 0.30 % Home equity 0.80 0.77 1.18 Auto finance 5.31 - - MasterCard/Visa 5.74 6.42 4.66 Private label 5.39 4.99 3.70 Other unsecured 6.18 5.93 4.18 - ----------------------------------------------------------------------------------------------------------------- Total 4.50% 4.63 % 3.59 % ================================================================================================================= Nonperforming Assets - ----------------------------------------------------------------------------------------------------------------- Nonaccrual managed receivables $ 973.5 $ 894.3 $ 778.5 Accruing managed receivables 90 or more days delinquent 672.0 634.7 549.0 Renegotiated commercial loans 12.4 12.9 12.9 - ----------------------------------------------------------------------------------------------------------------- Total nonperforming managed receivables 1,657.9 1,541.9 1,340.4 Real estate owned 127.3 150.5 136.6 - ----------------------------------------------------------------------------------------------------------------- Total nonperforming assets $1,785.2 $1,692.4 $1,477.0 ================================================================================================================= Managed credit loss reserves as a percent of nonperforming managed receivables 117.3 % 117.3 % 119.1 % - ----------------------------------------------------------------------------------------------------------------- Credit Loss Reserves - ----------------------------------------------------------------------------------------------------------------- Reserves for owned receivables at beginning of quarter $1,062.7 $1,051.0 $ 862.5 Provision for credit losses 239.2 257.8 222.3 Chargeoffs, net of recoveries (228.0) (239.9) (188.1) Portfolio acquisitions, net 8.3 (6.2) 3.5 - ----------------------------------------------------------------------------------------------------------------- Reserves for owned receivables at end of quarter 1,082.2 1,062.7 900.2 - ----------------------------------------------------------------------------------------------------------------- Credit loss reserves for receivables serviced with limited recourse at beginning of quarter 746.5 719.9 665.4 Provision for credit losses 350.7 294.6 218.2 Chargeoffs, net of recoveries (277.1) (267.1) (189.0) Other, net 42.2 (0.9) 1.4 - ----------------------------------------------------------------------------------------------------------------- Credit loss reserves for receivables serviced with limited recourse at end of quarter 862.3 746.5 696.0 - ----------------------------------------------------------------------------------------------------------------- Total credit loss reserves at end of quarter $1,944.5 $1,809.2 $1,596.2 ================================================================================================================= Credit loss reserves Owned $1,082.2 4.54% $1,062.7 4.35% $ 900.2 3.74% Serviced with limited recourse 862.3 4.00 746.5 3.80 696.0 3.76 - ----------------------------------------------------------------------------------------------------------------- Total managed credit loss reserves $1,944.5 4.29% $1,809.2 4.10% $1,596.2 3.75% ================================================================================================================= Prior to the quarter ended December 31, 1997, credit quality statistics for auto finance receivables were not significant. Credit quality data for these receivables were included in the other unsecured category. % Columns: comparisons to appropriate receivables.
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