Auto Lenders Offer Mixed Results, Increase Loss Provisions

Two prominent auto lenders released quarterly results recently with the numbers showing pros and cons for the period.

Auto loan finance firm AmeriCredit Corp. (NYSE: ACF) yesterday reported fiscal first quarter net income of $61.8 million, a drop of nearly 17 percent compared with $74.2 million in the same period a year ago. Managed receivables totaled $16.4 billion at quarter’s end, up 33 percent from $12.3 billion a year ago. 

Annualized net charge offs were 5.4 percent, unchanged from a year ago. Accounts more than 60 days delinquent made up 2.6 percent of the managed portfolio, compared with 2.5 percent a year ago.

The Fort Worth, Texas-based firm increased its provision for loan losses to $244.6 million, from $173.9 million, a rise of nearly 41 percent.

"While we saw normal seasonal credit deterioration during the September quarter, we also experienced weaker than expected results primarily from loans originated in 2006. As a result of this underperformance and a potentially softer economy in the near term, we have boosted the provision for loan losses for the quarter, which reduced our net income," AmeriCredit President and Chief Executive Officer Dan Berce said in a statement.

Consumer Portfolio Services, Inc. (NASDAQ: CPSS) last week reported net income of $3.7 million in its third quarter, down from $4.3 million in the third quarter a year ago. Revenues rose more than 39 percent to $102.8 million from $73.7 million a year ago.

The Irvine, Calif.-based firm purchased $340.2 million of contracts from auto dealers in the quarter, up nearly 34 percent from $254.4 million a year ago. The provision for credit losses was increased more than 51 percent to $36.3 million from $24.0 million in the third quarter of 2006.

Consumer Portfolio buys and services new and used retail automobile contracts originated by franchised automobile dealerships and by select independent dealers of used automobiles. Customers typically are subprime consumers.