8-K 1 fourhqtr01.txt 4TH QUARTER 01 SUPPLEMENT Highest Quarterly and Annual Net Income in Company History Fourteenth Consecutive Record Quarter o Fourth Quarter Earnings Per Share Rises 14%, to $1.17 o Fourth Quarter Net Income Increases to $549 Million o Receivables Up $5.2 Billion in the Quarter, to $100.8 Billion o Full Year Earnings Per Share of $4.08, Up 15% o Full Year Net Income of $1.9 Billion o Revenues Grow 18% for the Year Prospect Heights, IL, January 16, 2002 -- Household International (NYSE: HI) today reported fourth quarter earnings per share of $1.17, its fourteenth consecutive record quarter. Fourth quarter earnings per share rose 14 percent from $1.03 the prior year. Net income in the fourth quarter increased 11 percent, to an all-time quarterly record of $549 million. For the full year, Household reported earnings per share of $4.08, representing a 15 percent increase from $3.55 in 2000. Net income for 2001 totaled $1.9 billion, also an all-time high, 13 percent above $1.7 billion earned in 2000. "Household's fourth quarter results were simply outstanding," said William F. Aldinger, chairman and chief executive officer, "demonstrating the tremendous strength and earnings power of the Household franchise. Receivable and revenue growth exceeded our expectations while credit indicators weakened only modestly in a tough economic environment. Recognizing the importance of a strong balance sheet, we provided $154 million in excess of owned chargeoffs, bringing our reserves to their highest level ever." Commenting on the full-year results, Aldinger added, "In 2001, we demonstrated that our business model generates superior results in a weak economy as well as in the strong economic periods of previous years. Exceptional revenue growth of 18 percent more than offset the increases in credit losses during the year. We further strengthened our balance sheet while investing in sales and marketing to position our franchise for sustainable growth in the future. We are well-positioned to deliver 13 to 15 percent EPS growth for 2002." Fourth Quarter Review Receivable Growth At December 31, 2001, the company's managed portfolio reached $100.8 billion, up $5.2 billion, or 5.4 percent, from the third quarter. Growth was strong across all products. The real estate secured portfolio increased the most, up $2.8 billion in the quarter. This portfolio comprises over 44 percent of total managed receivables. During the quarter, the company purchased a private label credit card portfolio totaling approximately $725 million at December 31, 2001. In addition, the company sold approximately $1 billion in MasterCard/Visa receivables in the United Kingdom to Centrica, its former partner in the Goldfish Card program, as part of a settlement agreement. Revenues Fourth quarter managed net revenues grew $506 million, or 21 percent, from a year ago. An expanded net interest margin and higher receivable volume drove the increase. Household's managed net interest margin for the fourth quarter was $2.2 billion, an increase of $466 million, or 27 percent, compared to a year ago. The company's managed net interest margin percent widened to 8.85 percent from 8.01 percent a year ago. Lower funding costs were the primary reasons for the expansion. Managed fee income increased $17 million, or 4 percent, compared to the fourth quarter of 2000, principally reflecting higher levels of credit card fees. The company's risk adjusted revenue (managed net revenues less securitization revenues and chargeoffs) expanded to 7.79 percent from 7.60 percent a year ago. Operating Expenses Operating expenses rose 22 percent from a year ago, driven by higher payroll costs for sales personnel and collectors, higher sales incentives, and increased marketing and technology spending. Household's efficiency ratio was 31.2 percent in the fourth quarter, compared to 30.8 percent a year ago. Credit Quality and Loss Reserves At December 31st, the managed delinquency ratio (60+days) was 4.46 percent, up 3 basis points from 4.43 percent in the third quarter. The managed delinquency ratio was 4.20 percent a year ago. The annualized managed net chargeoff ratio for the fourth quarter was 3.90 percent, up 16 basis points from 3.74 percent in the third quarter. The managed net chargeoff ratio in the year-ago quarter was 3.41 percent. Managed credit loss reserves increased by $256 million during the quarter, to $3.8 billion. Compared to year-end 2000, credit loss reserves were up $617 million. The ratio of reserves-to-managed receivables was 3.78 percent at December 31, 2001 compared to 3.72 percent at September 30th and 3.65 percent a year earlier. Reserves-to-nonperforming loans were 105 percent at December 31st, compared to 104 percent at September 30th and 107 percent a year ago. Capital The company strengthened its ratio of tangible equity to tangible managed assets to 7.87 percent at December 31st, from 7.82 percent at September 30th and 7.41 percent a year earlier. In connection with its $2 billion share repurchase program, announced on March 9, 1999, Household bought back 2.2 million shares in the fourth quarter, totaling $140 million. The company's new, two-year $2 billion share repurchase program went into effect on January 1, 2002. At December 31st, Household had agreements with third parties to purchase, on a forward basis, approximately 6.5 million shares of common stock at a weighted average price of $59.14 per share. Full Year Highlights o Managed receivables were up over $13 billion, or 15 percent, in 2001, with the most robust growth in real estate secured receivables. o Managed revenues increased $1.6 billion, or 18 percent, driven by a strong net interest margin. The company's full-year net interest margin expanded 40 basis points, to 8.50 percent. o Operating expenses grew 18 percent in 2001, as the company grew its sales and collection staff to support its growing portfolio. The company also invested in technology, e-commerce and marketing to strengthen its franchise for the future. Household's 2001 efficiency ratio was 34.0 percent compared to 34.2 percent for 2000. o Credit losses grew moderately during 2001, with the full-year managed chargeoff ratio increasing 9 basis points, to 3.73 percent. The company strengthened its balance sheet throughout the year, providing $503 million to reserves in excess of owned chargeoffs. o Risk adjusted revenue for 2001 improved to 7.78 percent from 7.55 percent in 2000. o During 2001, the company repurchased 17.4 million shares, totaling $91 million. Notice of Live Webcast Household will broadcast its fourth quarter earnings teleconference call over the Internet on its website at www.household.com. The call will begin at 9:00 a.m. Central Standard Time on January 16, 2002. A replay will also be available shortly after the end of the call. About Household Household's businesses are leading providers of consumer loan, credit cards, auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household's largest business, founded in 1878, operates under the two oldest and most recognized names in consumer finance - HFC and Beneficial. Household is also one of the nation's largest issuers of private label and general purpose credit cards, including The GM Card(R) and the AFL-CIO's Union Plus(R) card. For more information, visit the company's web site at www.household.com. This press release contains certain estimates and projections that may be forward-looking in nature, as defined by the Private Securities Litigation Reform Act of 1995. A variety of factors may cause actual results to differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference are discussed in Household International's Annual Report on Form 10-K, filed with the SEC. CONTACTS: Craig A. Streem, Vice President - Corporate Relations and Communications: 847.564.6053, or Celeste Murphy, Director - Investor Relations: 847.564.7568, both of Household International December 31, 2001 - Quarterly Highlights ------------------------------------------------------------------------------- Summary Managed Income Statement Three Months Ended % Change from Prior ----------------------- -------------------- ($ millions) 12/31/01 9/30/01 12/31/00 Qtr. Year ------------------------------------------------------------------------------- Managed-basis net interest margin and other revenues(1)$ 2,940.4 $2,635.7 $2,434.7 11.6 % 20.8 % Managed-basis provision for credit losses (1) 1,184.0 966.8 917.0 22.5 29.1 Operating expenses 916.8 905.3 748.9 1.3 22.4 ------------------------------------------------------------------------------- Income before income taxes 839.6 763.6 768.8 10.0 9.2 Income taxes 290.7 259.8 276.1 11.9 5.3 ------------------------------------------------------------------------------- Net income $ 548.9 $ 503.8 $ 492.7 9.0 11.4 ------------------------------------------------------------------------------- Common Stock Data ------------------------------------------------------------------------------- Basic earnings per common share $ 1.18 $ 1.09 $ 1.05 8.3 % 12.4 % Diluted earnings per common share 1.17 1.07 1.03 9.3 13.6 ------------------------------------------------------------------------------- Average common shares (millions) 457.7 461.3 471.1 (0.8) (2.8) Average common and equivalent shares (millions) 463.2 467.7 476.1 (1.0) (2.7) ------------------------------------------------------------------------------- Common stock price: High $ 61.40 69.49 56.94 (11.6) 7.8 Low 51.29 48.00 43.88 6.9 16.9 Period end 57.94 56.38 55.00 2.8 5.3 ------------------------------------------------------------------------------- Dividends declared per common share $ .22 .22 .19 - 15.8 Book value per common share 19.47 18.59 16.88 4.7 15.3 ------------------------------------------------------------------------------- Key Ratios ------------------------------------------------------------------------------- Return on average common shareholders' equity 24.8% 23.6% 25.4% 5.1% (2.4)% Return on average owned assets 2.51 2.42 2.61 3.7 (3.8) Return on average managed assets 2.04 1.96 2.09 4.1 (2.4) Managed efficiency ratio 31.2 34.3 30.8 (9.0) 1.3 Managed net interest margin 8.85 8.57 8.01 3.3 10.5 Total shareholders' equity as a percent of managed assets 9.37 9.39 9.07 (0.2) 3.3 Tangible equity to tangible managed assets 7.87 7.82 7.41 0.6 6.2 ------------------------------------------------------------------------------- (1) To aid analysis, net interest margin, 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. ------------------------------------------------------------------------------- Yearly Highlights Summary Managed Income Statement Twelve Months Ended ----------------------------------- ($ millions) 12/31/01 12/31/00 % Change -------------------------------------------------------------------------------- Managed-basis net interest margin and other revenues (1) $ 10,544.8 $ 8,905.8 18.4 % Managed-basis provision for credit losses (1) 4,018.4 3,252.4 23.6 Operating expenses 3,587.9 3,042.9 17.9 -------------------------------------------------------------------------------- Income before income taxes 2,938.5 2,610.5 12.6 Income taxes 1,015.0 909.8 11.6 -------------------------------------------------------------------------------- Net income $ 1,923.5 $ 1,700.7 13.1 -------------------------------------------------------------------------------- Common Stock Data -------------------------------------------------------------------------------- Basic earnings per common share $ 4.13 $ 3.59 15.0 % Diluted earnings per common share 4.08 3.55 14.9 -------------------------------------------------------------------------------- Average common shares (millions) 462.0 471.8 (2.1) Average common and equivalent shares (millions) 468.1 476.2 (1.7) -------------------------------------------------------------------------------- Common stock price: High $ 69.98 $ 57.44 21.8 Low 48.00 29.50 62.7 Period end 57.94 55.00 5.3 -------------------------------------------------------------------------------- Dividends declared per common share $ .85 $ .74 14.9 -------------------------------------------------------------------------------- Key Ratios -------------------------------------------------------------------------------- Return on average common shareholders' equity 22.9 % 23.4 % (2.1)% Return on average owned assets 2.34 2.44 (4.1) Return on average managed assets 1.89 1.93 (2.1) Managed efficiency ratio 34.0 34.2 (0.6) Managed net interest margin 8.50 8.10 4.9 ------------------------------------------------------------------------------- Consolidated Statements of Income - Owned Basis Three Months ------------------------------------------------------------------------------- Three Months Ended % Change from Prior ------------------------------------------------- ($ millions) 12/31/01 9/30/01 12/31/00 Qtr. Year ------------------------------------------------------------------------------- Finance and other interest income $2,602.5 $ 2,536.6 $2,415.6 2.6% 7.7 % Interest expense 983.4 1,035.2 1,117.0 (5.0) (12.0) ------------------------------------------------------------------------------- Net interest margin 1,619.1 1,501.4 1,298.6 7.8 24.7 Provision for credit losses on owned receivables 829.3 722.9 574.8 14.7 44.3 ------------------------------------------------------------------------------- Net interest margin after provision for credit losses 789.8 778.5 723.8 1.5 9.1 ------------------------------------------------------------------------------- Securitization revenue - net 514.4 454.3 394.7 13.2 30.3 Insurance revenue 175.3 169.2 147.7 3.6 18.7 Investment income 45.8 42.3 47.0 8.3 (2.6) Fee income 245.7 250.6 234.4 (2.0) 4.8 Other income 59.9 51.5 33.5 16.3 78.8 ------------------------------------------------------------------------------- Total other revenues 1,041.1 967.9 857.3 7.6 21.4 ------------------------------------------------------------------------------- Salaries and fringe benefits 424.1 408.3 355.5 3.9 19.3 Sales incentives 71.0 74.1 50.3 (4.2) 41.2 Occupancy and equipment expense 84.1 86.1 77.1 (2.3) 9.1 Other marketing expenses 128.0 127.1 104.3 0.7 22.7 Other servicing and administrative expenses 172.2 172.3 122.8 (0.1) 40.2 Amortization of acquired intangibles and goodwill 37.4 37.4 38.9 - (3.9) Policyholders' benefits 74.5 77.5 63.4 (3.9) 17.5 ------------------------------------------------------------------------------- Total costs and expenses 991.3 982.8 812.3 0.9 22.0 ------------------------------------------------------------------------------- Income before income taxes 839.6 763.6 768.8 10.0 9.2 Income taxes 290.7 259.8 276.1 11.9 5.3 ------------------------------------------------------------------------------- Net income 548.9 503.8 492.7 9.0 11.4 Preferred dividends (8.0) (2.9) (2.3) 100+ 100+ ------------------------------------------------------------------------------- Earnings available to common shareholders $ 540.9 $ 500.9 $ 490.4 8.0 % 10.3 % ------------------------------------------------------------------------------- Effective tax rate 34.6 % 34.0 % 35.9 % 1.8 % (3.6)% ------------------------------------------------------------------------------- Balance Sheet Data ------------------------------------------------------------------------------- ($ millions) 12/31/01 9/30/01 12/31/00 ------------------------------------------------------------------------------- Owned assets $ 89,416.0 $ 85,177.8 $ 76,706.3 Managed assets 110,364.0 105,244.2 96,955.8 Managed receivables 100,822.7 95,655.1 87,607.4 Debt 75,410.2 71,676.5 64,517.8 Trust originated preferred securities 975.0 875.0 675.0 Preferred stock 455.8 455.8 164.4 Common shareholders' equity 8,202.8 7,922.8 7,951.2 Total shareholders' equity as a percent of managed assets 9.37 % 9.39 % 9.07 % Tangible equity to tangible managed assets 7.87 7.82 7.41 ------------------------------------------------------------------------------- Twelve Months -------------------------------------------------------------------------------- Twelve Months Ended -------------------------------------------------------------------------------- ($ millions) 12/31/01 12/31/00 % Change -------------------------------------------------------------------------------- Finance and other interest income $10,020.6 $ 8,694.3 15.3 % Interest expense 4,173.8 3,928.9 6.2 -------------------------------------------------------------------------------- Net interest margin 5,846.8 4,765.4 22.7 Provision for credit losses on owned receivables 2,912.9 2,116.9 37.6 -------------------------------------------------------------------------------- Net interest margin after provision for credit losses 2,933.9 2,648.5 10.8 -------------------------------------------------------------------------------- Securitization revenue - net 1,775.6 1,476.6 20.2 Insurance revenue 662.4 561.2 18.0 Investment income 167.7 174.2 (3.7) Fee income 966.9 825.8 17.1 Other income 322.5 228.8 41.0 -------------------------------------------------------------------------------- Total other revenues 3,895.1 3,266.6 19.2 -------------------------------------------------------------------------------- Salaries and fringe benefits 1,597.2 1,312.1 21.7 Sales incentives 273.2 203.6 34.2 Occupancy and equipment expense 337.4 306.6 10.0 Other marketing expenses 519.3 470.9 10.3 Other servicing and administrative expenses 709.6 589.7 20.3 Amortization of acquired intangibles and goodwill 151.2 160.0 (5.5) Policyholders' benefits 302.6 261.7 15.6 -------------------------------------------------------------------------------- Total costs and expenses 3,890.5 3,304.6 17.7 -------------------------------------------------------------------------------- Income before income taxes 2,938.5 2,610.5 12.6 Income taxes 1,015.0 909.8 11.6 -------------------------------------------------------------------------------- Net income 1,923.5 1,700.7 13.1 Preferred dividends (15.5) (9.2) 68.5 -------------------------------------------------------------------------------- Earnings available to common shareholders $ 1,908.0 $ 1,691.5 12.8 % -------------------------------------------------------------------------------- Effective tax rate 34.5 % 34.9 % (1.1)% -------------------------------------------------------------------------------- Consolidated Statements of Income - Managed Basis Securitizations and sales of consumer receivables are a source of liquidity for us. We continue to service the securitized receivables after such receivables are sold and we retain a limited recourse obligation. Securitizations impact the classification of revenues and expenses in the statement of operations. When reporting on a managed basis, net interest margin, provision for credit losses, fee income, and securitization related revenue related to receivables sold are reclassified from securitization revenue into the appropriate caption.
Three Months ----------------------------------------------------------------------------------------------------------------------- Three Months Ended % Change from Prior ----------------------------------------------------------------------------------------------------------------------- ($ millions) 12/31/01 (1) 9/30/01 (1) 12/31/00 (1) Qtr. Year ----------------------------------------------------------------------------------------------------------------------- Finance and other interest income $ 3,385.0 13.66% $ 3,304.8 13.99% $ 3,183.5 14.78% 2.4 % 6.3 % Interest expense 1,192.6 4.81 1,280.7 5.42 1,457.1 6.77 (6.9) (18.2) ----------------------------------------------------------------------------------------------------------------------- Net interest margin 2,192.4 8.85 % 2,024.1 8.57% 1,726.4 8.01% 8.3 27.0 Provision for credit losses 1,184.0 966.8 917.0 22.5 29.1 ----------------------------------------------------------------------------------------------------------------------- Net interest margin after provision for credit losses 1,008.4 1,057.3 809.4 (4.6) 24.6 ----------------------------------------------------------------------------------------------------------------------- Insurance revenue 175.3 169.2 147.7 3.6 18.7 Investment income 45.8 42.3 47.0 8.3 (2.6) Fee income 421.1 407.9 404.0 3.2 4.2 Securitization related revenue 120.4 18.2 139.5 100+ (13.7) Other income 59.9 51.5 33.5 16.3 78.8 ----------------------------------------------------------------------------------------------------------------------- Total other revenues 822.5 689.1 771.7 19.4 6.6 Operating expenses and policyholders' benefits 991.3 982.8 812.3 0.9 22.0 ----------------------------------------------------------------------------------------------------------------------- Income before income taxes 839.6 763.6 768.8 10.0 9.2 Income taxes 290.7 259.8 276.1 11.9 5.3 ----------------------------------------------------------------------------------------------------------------------- Net income $ 548.9 $ 503.8 $ 492.7 9.0 11.4 ----------------------------------------------------------------------------------------------------------------------- Average managed receivables: Real estate secured $ 43,300.4 $ 40,779.9 $ 35,934.4 6.2 % 20.5 % Auto finance 6,155.5 5,507.6 4,455.4 11.8 38.2 MasterCard/Visa (2) 17,680.3 17,361.4 16,833.7 1.8 5.0 Private label 12,880.0 12,178.2 11,552.4 5.8 11.5 Other unsecured 17,735.4 17,261.5 15,880.1 2.7 11.7 Commercial and other 525.7 545.4 620.0 (3.6) (15.2) ----------------------------------------------------------------------------------------------------------------------- Total 98,277.3 93,634.0 85,276.0 5.0 15.2 ----------------------------------------------------------------------------------------------------------------------- Average noninsurance investments 402.4 395.1 464.9 1.8 (13.4) Other interest-earning assets 466.5 460.7 442.5 1.3 5.4 Average managed interest-earning assets $ 99,146.2 $ 94,489.8 $ 86,183.4 4.9 % 15.0 % ----------------------------------------------------------------------------------------------------------------------- (1) %Columns: comparison to average managed interest-earning assets, annualized. (2) Mastercard and Visa are registered trademarks of Mastercard International, Incorporated and Visa Usa Inc., respectively.
Summary of Securitization Related Revenue Three Months Ended -------------------------------------------------------------------------------- ($ millions) 12/31/01 9/30/01 12/31/00 -------------------------------------------------------------------------------- Gross gains(1) $ 244.5 $ 152.4 $ 279.4 Amortization (124.1) (134.2) (139.9) -------------------------------------------------------------------------------- Securitization related revenue 120.4 18.2 139.5 Over-the-life provision on new transactions (2) 183.5 113.9 217.3 -------------------------------------------------------------------------------- Net effect of securitization activity - managed basis $ (63.1) $ (95.7) $ (77.8) -------------------------------------------------------------------------------- Net gain on receivables securitized (1) - (2) $ 61.0 $ 38.5 $ 62.1 -------------------------------------------------------------------------------- Receivables securitized: Auto finance 868.1 732.0 545.0 MasterCard/Visa - 109.9 650.0 Private label 500.0 - 500.0 Other unsecured 625.0 350.0 1,098.4 -------------------------------------------------------------------------------- Total $ 1,993.1 $ 1,191.9 $ 2,793.4 -------------------------------------------------------------------------------- Twelve Months -------------------------------------------------------------------------------- Twelve Months Ended -------------------------------------------------------------------------------- ($ millions) 12/31/01 (1) 12/31/00 (1) % Change -------------------------------------------------------------------------------- Finance and other interest income $ 13,153.4 14.08% $ 11,702.7 14.61% 12.4 % Interest expense 5,212.8 5.58 5,212.7 6.51 - -------------------------------------------------------------------------------- Net interest margin 7,940.6 8.50% 6,490.0 8.10% 22.4 Provision for credit losses 4,018.4 3,252.4 23.6 -------------------------------------------------------------------------------- Net interest margin after provision for credit losses 3,922.2 3,237.6 21.1 -------------------------------------------------------------------------------- Insurance revenue 662.4 561.2 18.0 Investment income 167.7 174.2 (3.7) Fee income 1,618.5 1,470.4 10.1 Securitization related revenue 135.7 242.9 (44.1) Other income 322.5 228.8 41.0 -------------------------------------------------------------------------------- Total other revenues 2,906.8 2,677.5 8.6 Operating expenses and policyholders'benefits 3,890.5 3,304.6 17.7 -------------------------------------------------------------------------------- Income before income taxes 2,938.5 2,610.5 12.6 Income taxes 1,015.0 909.8 11.6 -------------------------------------------------------------------------------- Net income $ 1,923.5 $ 1,700.7 13.1 -------------------------------------------------------------------------------- Average managed receivables: Real estate secured $ 40,049.6 $ 32,530.2 23.1 % Auto finance 5,323.5 3,842.3 38.5 MasterCard/Visa (2) 17,282.8 16,111.2 7.3 Private label 12,260.6 11,194.2 9.5 Other unsecured 17,013.8 14,760.8 15.3 Commercial and other 554.9 693.5 (20.0) -------------------------------------------------------------------------------- Total 92,485.2 79,132.2 16.9 Average noninsurance investments 436.5 539.3 (19.1) Other interest-earning assets 457.6 434.1 5.4 -------------------------------------------------------------------------------- Average managed interest- earnings $93,379.3 $80,105.6 16.6 % -------------------------------------------------------------------------------- Twelve Months Ended ---------------------------------------------------------------------------- ($ millions) 12/31/01 12/31/00 ---------------------------------------------------------------------------- Gross gains (1) $ 663.2 $ 683.1 Amortization (527.5) (440.2) ---------------------------------------------------------------------------- Securitization related revenue 135.7 242.9 Over-the-life provision on new transactions (2) 497.5 513.0 ----------------------------------------------------------------------------- Net effect of securitization activity - managed basis $ (361.8) $ (270.1) ---------------------------------------------------------------------------- Net gain on receivables securitized(1)-(2) $ 165.7 $ 170.1 ---------------------------------------------------------------------------- Receivables securitized: Auto finance 2,573.9 1,912.6 MasterCard/Visa 261.1 1,925.0 Private label 500.0 500.0 Other unsecured 2,123.6 2,637.4 ---------------------------------------------------------------------------- Total $ 5,458.6 $ 6,975.0 ----------------------------------------------------------------------------
Receivables Analysis End of Period Managed Receivables % Change from Prior -------------------------------------------------------------------------------------------------------------------------------- ($ millions) 12/31/01 9/30/01 12/31/00 Qtr. Year -------------------------------------------------------------------------------------------------------------------------------- Real estate secured $ 44,718.6 $ 41,930.9 $ 36,637.5 6.6 % 22.1 % Auto finance 6,395.5 5,869.2 4,563.3 9.0 40.2 MasterCard/Visa 17,395.2 17,303.7 17,583.4 0.5 (1.1) Private label 13,813.9 12,386.4 11,997.3 11.5 15.1 Other unsecured 17,992.6 17,631.5 16,227.3 2.0 10.9 Commercial and other 506.9 533.4 598.6 (5.0) (15.3) ---------------------------------------------------------------------------------------------------------------------------------- Managed portfolio $ 100,822.7 $ 95,655.1 $ 87,607.4 5.4 % 15.1 % ---------------------------------------------------------------------------------------------------------------------------------- Receivables (% of Managed Portfolio) -------------------------------------------------------------------------------------------------------------------------------- Real estate secured 44.4 % 43.8 % 41.8 % Auto finance 6.3 6.1 5.2 MasterCard/Visa 17.3 18.1 20.1 Private label 13.7 13.0 13.7 Other unsecured (1) 17.8 18.4 18.5 Commercial and other .5 .6 .7 -------------------------------------------------------------------------------------------------------------------------------- Total 100.0 % 100.0 % 100.0 % ------------------------------------------------------------------------------------------------------------------------------- End of Period Receivables ($ millions) -------------------------------------------------------------------------------------------------------------------------------- Owned receivables: Real estate secured $ 43,856.8 $ 40,822.3 $ 35,179.7 7.4 % 24.7 % Auto finance 2,368.9 2,340.1 1,850.6 1.2 28.0 MasterCard/Visa 8,141.2 8,066.9 8,053.6 0.9 1.1 Private label 11,663.9 10,736.4 10,347.3 8.6 12.7 Other unsecured 13,337.0 13,089.6 11,328.1 1.9 17.7 Commercial and other 506.9 533.4 598.6 (5.0) (15.3) -------------------------------------------------------------------------------------------------------------------------------- Total owned receivables 79,874.7 75,588.7 67,357.9 5.7 18.6 -------------------------------------------------------------------------------------------------------------------------------- Accrued finance charges 1,559.8 1,512.4 1,302.6 3.1 19.7 Credit loss reserve for owned receivables (2,663.1) (2,476.6) (2,111.9) 7.5 26.1 Unearned credit insurance premiums and claims reserves (895.8) (888.2) (725.2) 0.9 23.5 Amounts due and deferred from receivables sales 2,536.2 2,430.4 2,420.6 4.4 4.8 Reserve for receivables serviced with limited recourse (1,148.3) (1,078.4) (1,082.3) 6.5 6.1 -------------------------------------------------------------------------------------------------------------------------------- Total owned receivables, net 79,263.5 75,088.3 67,161.7 5.6 18.0 -------------------------------------------------------------------------------------------------------------------------------- Receivables serviced with limited recourse: Real estate secured 861.8 1,108.6 1,457.8 (22.3) (40.9) Auto finance 4,026.6 3,529.1 2,712.7 14.1 48.4 MasterCard/Visa 9,254.0 9,236.8 9,529.8 0.2 (2.9) Private label 2,150.0 1,650.0 1,650.0 30.3 30.3 Other unsecured 4,655.6 4,541.9 4,899.2 2.5 (5.0) -------------------------------------------------------------------------------------------------------------------------------- Total receivables serviced with limited recourse 20,948.0 20,066.4 20,249.5 4.4 3.4 -------------------------------------------------------------------------------------------------------------------------------- Total managed receivables, net $ 100,211.5 $ 95,154.7 $ 87,411.2 5.3 % 14.7 % ---------------------------------------------------------------------------------------------------------------------------------- (1) Personal homeowner loans are real estate secured loans that have been underwritten and priced as unsecured loans. Personal homeowner loans are included in the other unsecured line, and comprise 4.7% of Household's total managed portfolio at 12/31/01, 4.8% at 09/30/01, and 4.4% at 12/31/00.
Credit Quality/Credit Loss Reserves Two-Months-and-Over Contractual Delinquency -------------------------------------------------------------------------- As a percent of managed consumer receivab1es, excludes commercial 12/31/01 9/30/01 12/31/00 -------------------------------------------------------------------------- Real estate secured 2.68 % 2.74 % 2.63 % Auto finance 3.16 2.54 2.55 MasterCard/Visa 4.10 3.91 3.49 Private label 5.48 5.88 5.48 Other unsecured 8.87 8.51 7.97 -------------------------------------------------------------------------- Total 4.46 % 4.43 % 4.20 % -------------------------------------------------------------------------- Quarter-to-Date Chargeoffs, Net of Recoveries -------------------------------------------------------------------------- As a percent of average managed consumer receivables, annualized, excludes commercial. -------------------------------------------------------------------------- Real estate secured .65 % .52 % .41 % Auto finance 6.52 4.84 5.22 MasterCard/Visa 6.69 6.75 5.83 Private label 5.40 5.13 5.06 Other unsecured 7.05 7.00 5.92 -------------------------------------------------------------------------- Total 3.90 % 3.74 % 3.41 % -------------------------------------------------------------------------- Nonperforming Assets -------------------------------------------------------------------------- ($ millions) -------------------------------------------------------------------------- Nonaccrual managed receivables $ 2,566.2 $ 2,429.4 $ 2,112.3 Accruing managed receivables 90 or more days delinquent 1,062.2 993.6 872.1 -------------------------------------------------------------------------- Total nonperforming managed receivables 3,628.4 3,423.0 2,984.4 Real estate owned 399.0 363.1 337.1 -------------------------------------------------------------------------- Total nonperforming assets $ 4,027.4 $ 3,786.1 $ 3,321.5 -------------------------------------------------------------------------- Managed credit loss reserves as a percent of nonperforming managed receivables 105.0 % 103.9 % 107.0 % --------------------------------------------------------------------------
Credit Loss Reserves ------------------------------------------------------------------------------------------------ ($ millions) 12/31/01 9/30/01 12/31/00 ------------------------------------------------------------------------------------------------ Reserves for owned receivables at beginning of quarter $ 2,476.6 $ 2,376.5 $ 2,009.2 Provision for credit losses 829.3 722.9 574.8 Chargeoffs, net of recoveries (675.1) (630.2) (490.3) Other, net 32.3 7.4 18.2 ------------------------------------------------------------------------------------------------ Reserves for owned receivables at end of quarter 2,663.1 3.33 %(1) 2,476.6 3.28%(1) 2,111.9 3.14%(1) Credit loss reserves for receivables serviced with limited recourse at beginning of quarter 1,078.4 1,080.0 976.8 Provision for credit losses 354.7 243.9 342.2 Chargeoffs, net of recoveries (288.2) (240.4) (231.6) Other, net 3.4 (5.1) (5.1) ------------------------------------------------------------------------------------------------ Credit loss reserves for receivables serviced with limited recourse at end of quarter 1,148.3 5.48 %(1) 1,078.4 5.37%(1) 1,082.3 5.34%(1) ------------------------------------------------------------------------------------------------ Total managed credit loss reserves at end of quarter $ 3,811.4 3.78 %(1)$ 3,555.0 3.72%(1)$ 3,194.2 3.65%(1) ------------------------------------------------------------------------------------------------ (1) % Columns: comparisons to appropriate receivables.