Subprime lender AmeriCredit reports that it has completed a downsizing plan that will limit its quarterly loan originations to $750 million by June. The reduction initiative, following a net loss of nearly $45 million in 2002's fourth quarter, includes termination of about 1,000 workers and extensive branch consolidation.
The Fort Worth, TX-based financial institution also reported that it has increased its committed credit facilities to the $4 billion level and now is better positioned to “pursue late-stage delinquencies.”
The 2002 fourth-quarter loss was attributed by Chairman and CEO Michael R. Barrington to the depressed used-vehicle market and “continued weakness in recovery values on repossessed vehicles.”
In reporting strengthening of its credit facility, AmeriCredit CFO Daniel Berce says the delinquency rate has “improved reasonably so far this year.”
Prior to the loss quarter, AmeriCredit had posted a 10-year record of profitable operations and built its portfolio to about 10,000 franchised and independent dealers in all 50 states. Its loan originations in the first quarter of this year were projected by Berce at $1.3 billion-$1.5 billion, on par with results prior to the cutback program this spring.
