AmeriCredit Car-Loan Losses Ebb as it Eases Off Subprime

Warding off domestic-brand sales slumps in California, leading subprime lender AmeriCredit Corp. is reporting loan origination and net income increases.

The lender posted fiscal year 2007 net income of $360.2 million, up from $306.1 million in 2006. The annual income reflects a $6 million gain from sale of AmeriCredit's investment in online financing firm Dealer Track Holdings Inc.

AmeriCredit president and CEO Dan Berce says that despite decreased domestic-brand sales, the lender boosted new-loan originations to a near-record $2.51 billion in its fourth fiscal quarter and to $8.45 billion for the full year.

Berce says AmeriCredit's net credit losses ebbed to the lowest level in the company's 15-year history, “reflecting our shift to increased acceptances of prime and near-prime loans.”

It has a portfolio of 15,300 mostly franchised dealers in the U.S. and Canada and receivables of about $16 billion.

Berce says the company is experiencing a “ruboff” effect of increased foreclosures in home mortgages and subprime non-auto loans, even though its own auto-only portfolio was stronger in fiscal 2007 than in 2006.

‘The auto market remains volatile,’ Berce says. ‘Our model has helped us grow in such a market, with our absorption of subprime lenders Bay View Acceptance and Long Beach Acceptance and our decision to raise our portfolio of prime and near-prime loans to about 38% of our total portfolio.”