Household International
Reports Highest Quarterly EPS in its History;
Ninth Consecutive Record Quarter
- Third Quarter Earnings Per Share of $.94, Up 13%
- Net Income of $451 Million, Up 13%
- Loan Portfolio Tops $83 Billion, Up 23%
- Return on Equity Exceeds 24%
Prospect Heights, IL, October 18, 2000 -- Household International (NYSE:
HI) today reported the highest quarterly earnings in its history. Third quarter
earnings per share rose 13 percent to $.94, compared to $.83 a year ago. Net
income also rose to a third quarter record of $451.2 million, a 13 percent
increase from $399.9 million a year ago. Cash earnings per share for the quarter
totaled $1.02.
For the first nine months of 2000, earnings per share increased 17 percent
over the prior year to $2.52. Net income of over $1.2 billion represented a 15
percent increase over the same year-ago period.
"Our strong third quarter results reflect a continuation of outstanding
receivables and revenue growth. At the same time, we achieved year-over-year
improvements in credit quality," said William F. Aldinger, Household's chairman
and chief executive officer. "I am particularly pleased that Household is
delivering record results while making significant investments in personnel,
technology, sales incentives and marketing to support the growth of our
franchise. These positive trends give us a high degree of confidence in our
ability to deliver 15 percent EPS growth for 2000."
Receivable Growth
The company's managed portfolio grew $3.5 billion, or four percent, during
the quarter. All core product lines contributed to the growth. Growth in the
company's domestic consumer finance business was particularly strong, increasing
$2.3 billion in the quarter. Managed receivables rose 23 percent from a year
ago, bringing the total portfolio to $83.5 billion at September 30.
Revenues
Managed-basis revenues increased 13 percent, or $251 million, from a year
ago. Strong increases in net interest income and credit card fees were tempered
by lower securitization-related income. Revenues, excluding
securitization-related income, increased 17 percent from the year-ago period.
Net interest income increased 17 percent, or $233 million, driven by higher
receivable volumes. In percentage terms, the managed net interest margin in the
third quarter was 7.95 percent, compared to 8.17 percent in the second quarter
and 8.36 percent a year ago. The change in mix toward more secured loans as
well as higher funding costs have led to a somewhat lower net interest margin.
The company's risk adjusted revenue (net interest margin and fees less
chargeoffs), however, expanded to 7.45 percent from 7.37 percent in the prior
quarter and 7.41 percent a year ago.
Managed fee income grew 23 percent, or $71 million, compared to the third
quarter of 1999, principally reflecting higher fees in the company's credit card
businesses.
Operating Expenses
Operating expenses rose 19 percent, or $121 million, from a year ago,
driven by increased expenditures to support growth, including higher personnel
costs and sales force incentive compensation as well as marketing expenses.
Household s efficiency ratio was 33.8 percent for the third quarter of 2000,
compared to 31.9 percent in the year-ago quarter.
Credit Quality and Loss Reserves
The annualized managed net chargeoff ratio for the third quarter improved
for a second consecutive quarter, to 3.47 percent from 3.74 percent in the
second quarter. Dollars of net chargeoff also fell for the second consecutive
quarter. The third quarter chargeoff ratio dropped 62 basis points from the
level of a year ago, with improvement across all products. At September 30, the
managed delinquency ratio (60+days) was 4.21 percent, compared with 4.16 percent
in the second quarter and significantly below the year-ago level of
4.89 percent.
Credit loss reserves increased $38 million in the third quarter, to almost
$3 billion at September 30. The ratio of reserves-to-managed receivables was
3.58 percent at the end of the third quarter, compared to 3.69 percent at
June 30 and 3.84 percent a year ago. Reserves-to-nonperforming loans at
September 30 were 106.7 percent compared to 101.5 percent a year earlier.
Household's ratio of tangible equity to tangible managed assets improved to
7.33 percent at September 30, 2000 compared to 7.00 percent a year earlier.
Share Repurchase Program
In connection with its $ 2 billion share repurchase program, announced on
March 9, 1999, Household bought back 1.6 million shares in the third quarter,
totaling $64 million. At September 30 the company had agreements with third
parties to purchase, on a forward basis, approximately 6.6 million shares of its
common stock at a weighted average price of $39.35 per share.
Notice of Live Webcast
Household will broadcast its third quarter earnings teleconference call
live over the Internet on its website at www.household.com. The call will begin
today at 10:00 am Central Daylight Time. A replay will also be available after
the end of the call, running through October 22, 2000.
Household International, through its subsidiaries, is a leading provider of
consumer finance, credit card, auto finance and credit insurance products in the
United States, United Kingdom and Canada. In the United States, Household
operates under the two oldest and most recognized names in consumer finance -
HFC and Beneficial. Household is also one of the nation's largest issuers of
private-label and general purpose credit cards, including the GM Card and the
AFL-CIO's Union Privilege card. For more information, visit the company's web
site at http://www.household.com.
This press release contains certain estimates and projections that may be
forward-looking in nature, as defined by the Private Securities Litigation
Reform Act of 1995. A variety of factors may cause actual results to differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference are discussed in Household
International's periodic reports that are filed with the SEC.
# # #
CONTACT:
Craig A. Streem, Vice President -- Investor Relations, 847-564-6053,
or Celeste M. Murphy, Director -- Investor Relations, 847-564-7568,
both of Household International
Quarterly Financial Supplement
<TABLE>
<CAPTION>
September 30, 2000 - Quarterly Highlights
------------------------------------------
%Change
Summary Managed Income Statement Three Months Ended from Prior
-------------------------------------------
($ millions) 9/30/00 6/30/00 9/30/99 Qtr. Year
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
Managed-basis net interest
margin and other revenues (1) $ 2,213.4 $ 2,092.5 $1,962.6 5.8% 12.8%
Managed-basis provision for
credit losses (1) ........... 774.9 744.3 741.1 4.1 4.6
Operating expenses .................. 747.7 762.8 626.8 (2.0) 19.3
--------------------------------------------------------------------------------
Income before income taxes .......... 690.8 585.4 594.7 18.0 16.2
Income taxes ........................ 239.6 201.5 194.8 18.9 23.0
--------------------------------------------------------------------------------
Net income ..........................$ 451.2 $ 383.9 $ 399.9 17.5 12.8
--------------------------------------------------------------------------------
Common Stock Data
Basic earnings per common share .....$ .95 $ .80 $ .84 18.8% 13.1%
Diluted earnings per common share ... .94 .80 .83 17.5 13.3
--------------------------------------------------------------------------------
Average common shares (millions) .... 472.4 473.3 475.6 (0.2) (0.7)
Average common and equivalent
shares (millions) ......... 477.6 477.0 480.2 0.1 (0.5)
--------------------------------------------------------------------------------
Common stock price:
High ...........................$ 57.44 $ 48.19 $ 50.19 19.2 14.4
Low ............................ 41.00 36.00 36.19 13.9 13.3
Period end ..................... 56.63 41.56 40.13 36.3 41.1
--------------------------------------------------------------------------------
Dividends declared per common share . .19 .19 .17 - 11.8
Book value per common share ......... 16.00 15.28 13.26 4.7 20.7
--------------------------------------------------------------------------------
Key Ratios
--------------------------------------------------------------------------------
Return on average common shareholders'
equity ........... 24.2% 21.5% 25.3% 12.6% (4.3)%
Return on average owned assets ...... 2.48 2.27 2.80 9.3 (11.4)
Return on average managed assets .... 1.98 1.78 2.14 11.2 (7.5)
Managed efficiency ratio, normalized 33.8 36.5 31.9 (7.4) 6.0
Managed net interest margin ......... 7.95 8.17 8.36 (2.7) (4.9)
Total shareholders' equity as a
percent of managed assets 9.06 9.06 8.91 - 1.7
Tangible equity to tangible
managed assets 7.33 7.23 7.00 1.4 4.7
(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.
--------------------------------------------------------------------------------
</TABLE>
Year to Date Highlights
-------------------------------------------------------------------------------
Summary Managed Income Statement Nine Months Ended
-------------------
($ millions) 9/30/00 9/30/99 % Change
-------------------------------------------------------------------------------
Managed-basis net interest margin and
other revenues ......................... $ 6,471.1 $ 5,499.2 17.7%
Managed-basis provision for credit losses (1) 2,335.4 2,043.7 14.3
Operating expenses .......................... 2,294.0 1,892.6 21.2
----------------------------------------------------------------------------
Income before income taxes .................. 1,841.7 1,562.9 17.8
Income taxes ................................ 633.7 515.3 23.0
----------------------------------------------------------------------------
Net income .................................. $ 1,208.0 $ 1,047.6 15.3
----------------------------------------------------------------------------
Common Stock Data
Basic earnings per common share ............. $ 2.54 $ 2.17 17.1%
Diluted earnings per common share ........... 2.52 2.15 17.2
----------------------------------------------------------------------------
Average common shares (millions) ............ 472.1 479.7 (1.6)
Average common and equivalent shares (millions) 476.2 484.8 (1.8)
----------------------------------------------------------------------------
Common stock price:
High ................................... $ 57.44 $ 52.31 9.8
Low .................................... 29.50 36.19 (18.5)
Period end ............................. 56.63 40.13 41.1
----------------------------------------------------------------------------
Dividends declared per common share ......... $ .55 $ .51 7.8
----------------------------------------------------------------------------
Key Ratios
----------------------------------------------------------------------------
Return on average common shareholders' equity .. 22.6% 22.2% 1.8%
Return on average owned assets ................. 2.38 2.52 (5.6)
Return on average managed assets ............... 1.87 1.89 (1.1)
Managed efficiency ratio, normalized ........... 35.5 34.4 3.2
Managed net interest margin .................... 8.13 8.21 (1.0)
----------------------------------------------------------------------------
(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.
Consolidated Statements of Income - Owned Basis
Three Months
% Change
Three Months Ended from Prior
--------------------------------------------
($ millions) 9/30/00 6/30/00 9/30/99 Qtr. Year
-------------------------------------------------------------------------------
Finance income .................. $2,262.1 $2,074.2 $1,694.7 9.1% 33.5%
Other interest income ............. 8.3 9.2 8.0 (9.8) 3.8
Interest expense .................. 1,057.2 933.0 703.7 13.3 50.2
------------------------------------------------------------------------------
Net interest margin ............... 1,213.2 1,150.4 999.0 5.5 21.4
Provision for credit losses
on owned receivables .... 524.4 495.6 438.1 5.8 19.7
-------------------------------------------------------------------------------
Net interest margin after
provision for credit losses 688.8 654.8 560.9 5.2 22.8
-------------------------------------------------------------------------------
Securitization income ............. 379.9 355.6 357.9 6.8 6.1
Insurance revenues ................ 146.7 131.8 130.6 11.3 12.3
Investment income ................. 43.9 42.5 45.0 3.3 (2.4)
Fee income ........................ 216.2 195.9 155.7 10.4 38.9
Other income ...................... 30.1 31.9 32.4 (5.6) (7.1)
-------------------------------------------------------------------------------
Total other revenues .............. 816.8 757.7 721.6 7.8 13.2
-------------------------------------------------------------------------------
Salaries and fringe benefits ...... 333.0 321.5 262.6 3.6 26.8
Sales incentives .................. 53.1 57.4 42.1 (7.5) 26.1
Occupancy and equipment expense ... 78.4 75.6 66.6 3.7 17.7
Other marketing expenses .......... 108.2 125.3 91.5 (13.6) 18.3
Other servicing and administrative
expenses ....................... 136.0 144.1 128.5 (5.6) 5.8
Amortization of acquired
intangibles and goodwill ....... 39.0 38.9 35.5 0.3 9.9
Policyholders' benefits ........... 67.1 64.3 61.0 4.4 10.0
-------------------------------------------------------------------------------
Total costs and expenses ........ 814.8 827.1 687.8 (1.5) 18.5
------------------------------------------------------------------------------
Income before income taxes ..... 690.8 585.4 594.7 18.0 16.2
Income taxes ...................... 239.6 201.5 194.8 18.9 23.0
-------------------------------------------------------------------------------
Net income ........................ 451.2 383.9 399.9 17.5 12.8
Preferred dividends ............... (2.3) (2.3) (2.3) - -
-------------------------------------------------------------------------------
Earnings available to common
shareholders ................... $ 448.9 $ 381.6 $ 397.6 17.6% 12.9%
--------------------------------------------------------------------------------
Effective tax rate .............. 34.7% 34.4% 32.8% 0.9% 5.8%
--------------------------------------------------------------------------------
Nine Months
Nine Months Ended
-------------------
($ millions) 9/30/00 9/30/99 % Change
-------------------------------------------------------------------------------
Finance income ...................................$ 6,252.3 $ 4,776.3 30.9%
Other interest income ............................. 26.4 25.3 4.3
Interest expense .................................. 2,811.9 2,013.8 39.6
-------------------------------------------------------------------------------
Net interest margin ............................... 3,466.8 2,787.8 24.4
Provision for credit losses on owned receivables .. 1,542.1 1,263.2 22.1
-------------------------------------------------------------------------------
Net interest margin after provision for credit losses 1,924.7 1,524.6 26.2
-------------------------------------------------------------------------------
Securitization income ............................. 1,081.9 995.3 8.7
Insurance revenues ................................ 413.5 405.4 2.0
Investment income ................................. 127.2 128.0 (0.6)
Fee income ........................................ 591.4 421.2 40.4
Other income ...................................... 195.3 180.0 8.5
-------------------------------------------------------------------------------
Total other revenues ........... 2,409.3 2,129.9 13.1
-------------------------------------------------------------------------------
Salaries and fringe benefits ...................... 956.6 778.5 22.9
Sales incentives .................................. 153.3 108.9 40.8
Occupancy and equipment expense ................... 229.5 200.0 14.8
Other marketing expenses .......................... 366.6 264.0 38.9
Other servicing and administrative expenses ....... 466.9 433.4 7.7
Amortization of acquired intangibles and goodwill . 121.1 107.8 12.3
Policyholders' benefits ........................... 198.3 199.0 (0.4)
-------------------------------------------------------------------------------
Total costs and expenses .......................... 2,492.3 2,091.6 19.2
-------------------------------------------------------------------------------
Income before income taxes ........................ 1,841.7 1,562.9 17.8
Income taxes ...................................... 633.7 515.3 23.0
-------------------------------------------------------------------------------
Net income ........................................ 1,208.0 1,047.6 15.3
Preferred dividends ............................... (6.9) (6.9) -
-------------------------------------------------------------------------------
Earnings available to common shareholders ........ $1,201.1 $1,040.7 15.4%
Effective tax rate ................................ 34.4% 33.0% 4.2%
-------------------------------------------------------------------------------
Balance Sheet Data
-------------------------------------------------------------------------------
($ millions) 9/30/00 6/30/00 9/30/99
-------------------------------------------------------------------------------
Owned assets ..................................$ 73,728.6 $ 70,469.7 $ 57,585.5
Managed assets ................................ 92,596.1 89,035.9 76,050.1
Managed receivables ........................... 83,453.9 79,945.0 67,807.1
Debt .......................................... 61,900.6 59,076.4 47,234.7
Trust originated preferred securities ......... 675.0 675.0 375.0
Preferred stock ............................... 164.4 164.4 164.4
Common shareholders' equity ................... 7,550.4 7,224.7 6,240.0
Total shareholders' equity as a percent
of managed assets ............................ 9.06% 9.06% 8.91%
Tangible equity to tangible managed assets ...... 7.33 7.23 7.00
--------------------------------------------------------------------------------
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 income
related to receivables sold are reclassified from securitization income into the
appropriate caption.
<TABLE>
<CAPTION>
Three Months % Change
Three Months Ended from prior
-------------------------------------------------------- -------------
($ millions) ..... 9/30/00 (1) 6/30/00 (1) 9/30/99 (1) Qtr. Year
<S> ..................................... <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Finance and other interest income ......$ 3,033.9 14.67% $ 2,839.6 14.54% $2,368.2 14.04% 6.8% 28.1%
Interest expense ....................... 1,390.6 6.72 1,244.8 6.37 958.3 5.68 11.7 45.1
-----------------------------------------------------------------------------------------------------------------
Net interest margin .................... 1,643.3 7.95% 1,594.8 8.17% 1,409.9 8.36% 3.0 16.6
Provision for credit losses ............ 774.9 744.3 741.1 4.1 4.6
-----------------------------------------------------------------------------------------------------------------
Net interest margin after provision
for credit losses ................... 868.4 850.5 668.8 2.1 29.8
--------------------------------------------------------------------------------------------
Insurance revenues ..................... 146.7 131.8 130.6 11.3 12.3
Investment income ...................... 43.9 42.5 45.0 3.3 (2.4)
Fee income ............................. 380.3 353.3 309.8 7.6 22.8
Securitization related income .......... 36.2 2.5 95.9 NMF (62.3)
Other income ........................... 30.1 31.9 32.4 (5.6) (7.1)
--------------------------------------------------------------------------------------------
Total other revenues ................... 637.2 562.0 613.7 13.4 3.8
Operating expenses and policyholders'
benefits ........................... 814.8 827.1 687.8 (1.5) 18.5
--------------------------------------------------------------------------------------------
Income before income taxes ............. 690.8 585.4 594.7 18.0 16.2
Income taxes ........................... 239.6 201.5 194.8 18.9 23.0
--------------------------------------------------------------------------------------------
Net income ............................. $451.2 $383.9 $399.9 17.5% 12.8%
--------------------------------------------------------------------------------------------
Average managed receivables:
Real estate secured ...............$34,617.3 $31,912.0 $24,702.2 8.5% 40.1%
Auto finance ...................... 4,116.9 3,602.6 2,532.3 14.3 62.6
MasterCard/Visa (2) ............... 16,193.1 15,748.2 15,021.5 2.8 7.8
Private label ..................... 11,088.1 10,964.8 10,109.9 1.1 9.7
Other unsecured ................... 15,123.7 14,154.5 13,255.6 6.8 14.1
Commercial and other .............. 664.3 719.5 802.1 (7.7) (17.2)
--------------------------------------------------------------------------------------------
Total ............................. 81,803.4 77,101.6 66,423.6 6.1 23.2
Average noninsurance investments ....... 471.4 563.0 607.6 (16.3) (22.4)
Other interest-earning assets .......... 436.7 431.2 418.0 1.3 4.5
--------------------------------------------------------------------------------------------
Average managed interest-earning
assets $82,711.5 $78,095.8 $ 67,449.2 5.9 % 22.6%
-------------------------------------------------------------------------------------------
</TABLE>
(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.
Nine Months
Nine Months Ended
--------------------------------------------------------------------------------
($ millions) 9/30/00 (1) 9/30/99 (1) % Change
-------------------------------------------------------------------------------
Finance and other interest income ...$ 8,519.2 14.54% $6,850.6 13.82% 24.4%
Interest expense .................... 3,755.6 6.41 2,781.4 5.61 35.0
-------------------------------------------------------------------------------
Net interest margin ................. 4,763.6 8.13% 4,069.2 8.21% 17.1
Provision for credit losses ......... 2,335.4 2,043.7 14.3
-------------------------------------------------------------------------------
Net interest margin after provision
for credit losses ................ 2,428.2 2,025.5 19.9
-------------------------------------------------------------------------------
Insurance revenues .................. 413.5 405.4 2.0
Investment income ................... 127.2 128.0 (0.6)
Fee income .......................... 1,066.4 861.1 23.8
Securitization related income ....... 103.4 54.5 89.7
Other income ........................ 195.3 180.0 8.5
-------------------------------------------------------------------------------
Total other revenues ................ 1,905.8 1,629.0 17.0
Operating expenses and policyholders'
benefits ........................ 2,492.3 2,091.6 19.2
-------------------------------------------------------------------------------
Income before income taxes .......... 1,841.7 1,562.9 17.8
Income taxes ........................ 633.7 515.3 23.0
-------------------------------------------------------------------------------
Net income .......................... $ 1,208.0 $ 1,047.6 15.3
-------------------------------------------------------------------------------
Average managed receivables:
Real estate secured ............ $ 31,395.4 $ 23,953.7 31.1%
Auto finance ................... 3,638.0 2,205.0 65.0
MasterCard/Visa (2) ............ 15,870.3 15,328.2 3.5
Private label .................. 11,074.8 10,074.3 9.9
Other unsecured ................ 14,387.7 12,767.3 12.7
Commercial and other ........... 718.1 805.9 (10.9)
-------------------------------------------------------------------------------
Total .......................... 77,084.3 65,134.4 18.3
Average noninsurance investments .... 564.1 513.9 9.8
Other interest-earning assets ....... 431.3 414.7 4.0
-------------------------------------------------------------------------------
Average managed interest-earning
assets $ 78,079.7 $ 66,063.0 18.2%
-------------------------------------------------------------------------------
(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.
Reconciliation of Securitization Related Income
Three Months Ended
-------------------------------------------------------------------------------
($ millions) 9/30/00 6/30/00 9/30/99
-------------------------------------------------------------------------------
Gross gains ................................... $ 142.5 $ 96.8 $ 172.0
Amortization .................................. (106.3) (94.3) (76.1)
-------------------------------------------------------------------------------
Securitization related income ................. 36.2 2.5 95.9
Over the life provision on new transactions ... 101.4 72.3 135.7
-------------------------------------------------------------------------------
Net effect of securitization activity ......... $ (65.2) $ (69.8) $ (39.8)
-------------------------------------------------------------------------------
Receivables securitized ....................... $1,705.6 $ 1,004.0 $1,670.0
-------------------------------------------------------------------------------
Reconciliation of Securitization Related Income
Nine Months Ended
------------------------------------------------------------------------
($ millions) 9/30/00 9/30/99
------------------------------------------------------------------------
Gross gains $ 403.7 $ 310.7
Amortization (300.3) (256.2)
------------------------------------------------------------------------
Securitization related income 103.4 54.5
Over the life provision on new transactions 295.7 239.7
------------------------------------------------------------------------
Net effect of securitization activity $ (192.3) $ (185.2)
------------------------------------------------------------------------
Receivables securitized $ 4,181.6 $ 3,152.0
------------------------------------------------------------------------
Receivables Analysis
End of Period Managed Receivables
% Change
from Prior
-----------
($ millions) 9/30/00 6/30/00 9/30/99 Qtr. Year
-----------------------------------------------------------------------------
Real estate secured .........$ 35,289.0 $ 33,964.7 $ 25,261.4 3.9% 39.7%
Auto finance ................ 4,329.5 3,850.8 2,700.8 12.4 60.3
MasterCard/Visa ............. 16,376.8 15,887.3 14,961.5 3.1 9.5
Private label ............... 11,278.0 10,951.3 10,456.2 3.0 7.9
Other unsecured ............. 15,538.3 14,597.2 13,600.8 6.4 14.2
Commercial and other ........ 642.3 693.7 826.4 (7.4) (22.3)
------------------------------------------------------------------------------
Managed portfolio ...........$ 83,453.9 $ 79,945.0 $ 67,807.1 4.4% 23.1%
------------------------------------------------------------------------------
Receivables (% of Managed Portfolio)
Real estate secured .......... 42.3% 42.5% 37.2%
Auto finance ................ 5.2 4.8 4.0
MasterCard/Visa ............. 19.6 19.8 22.1
Private label ............... 13.5 13.7 15.4
Other unsecured ............. 18.6 18.3 20.1
Commercial and other ........ .8 .9 1.2
---------------------------------------------------------------
Total ....................... 100.0 % 100.0% 100.0%
---------------------------------------------------------------
<TABLE>
<CAPTION>
% Change
from prior
------------
End of Period Receivables ($ millions) 9/30/00 6/30/00 9/30/99 Qtr. Year
----------------------------------------------------------------------------------------------------------
Owned receivables:
<S> <C> <C> <C> <C> <C>
Real estate secured .............................. $ 33,595.1 $ 32,168.5 $ 22,766.2 4.4% 47.6%
Auto finance ..................................... 1,917.7 1,753.7 1,065.3 9.4 80.0
MasterCard/Visa .................................. 7,203.0 7,013.7 5,996.3 2.7 20.1
Private label .................................... 10,128.0 9,801.3 9,806.2 3.3 3.3
Other unsecured .................................. 11,100.3 9,947.9 8,882.1 11.6 25.0
Commercial and other .............................. 642.3 693.7 826.4 (7.4) (22.3)
-----------------------------------------------------------------------------------------------------------
Total owned receivables .............................. 64,586.4 61,378.8 49,342.5 5.2 30.9
-----------------------------------------------------------------------------------------------------------
Accrued finance charges .............................. 1,187.2 1,093.1 786.5 8.6 50.9
Credit loss reserve for owned receivables ............ (2,009.2) (1,986.5) (1,750.3) 1.1 14.8
Unearned credit insurance premiums and claims reserves (646.0) (593.7) (541.2) 8.8 19.4
Amounts due and deferred from receivables sales ...... 2,231.2 2,192.8 2,103.6 1.8 6.1
Reserve for receivables serviced with limited recourse (976.8) (961.7) (855.5) 1.6 14.2
------------------------------------------------------------------------------------------------------------
Total owned receivables, net ......................... 64,372.8 61,122.8 49,085.6 5.3 31.1
------------------------------------------------------------------------------------------------------------
Receivables serviced with limited recourse:
Real estate secured ............................. 1,693.9 1,796.2 2,495.2 (5.7) (32.1)
Auto finance .................................... 2,411.8 2,097.1 1,635.5 15.0 47.5
MasterCard/Visa ................................. 9,173.8 8,873.6 8,965.2 3.4 2.3
Private label ................................... 1,150.0 1,150.0 650.0 - 76.9
Other unsecured ................................. 4,438.0 4,649.3 4,718.7 (4.5) (5.9)
------------------------------------------------------------------------------------------------------------
Total receivables serviced with limited recourse 18,867.5 18,566.2 18,464.6 1.6 2.2
------------------------------------------------------------------------------------------------------------
Total managed receivables, net ....................... $ 83,240.3 $ 79,689.0 $ 67,550.2 4.5% 23.2%
------------------------------------------------------------------------------------------------------------
(1) Personal Homeowner Loans are real estate loans that have been underwritten
and priced as unsecured loans. Personal Homeowner Loans are included in the
other unsecured line and comprise 4.1% of Household's total managed portfolio at
9/30/00, 3.8% at 6/30/00, and 3.4% at 9/30/99.
</TABLE>
Credit Quality/Credit Loss Reserves
Two-Months-and-Over Contractual Delinquency
As a percent of managed consumer receivables, excludes
commercial.
9/30/00 6/30/00 9/30/99
-----------------------------------------------------------------
Real estate secured ......... 2.77% 2.72% 3.46%
Auto finance ................ 2.19 1.99 2.26
MasterCard/Visa ............. 3.48 3.14 3.10
Private label ............... 5.67 5.77 6.66
Other unsecured ............. 7.72 7.92 8.57
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Total ....................... 4.21% 4.16% 4.89%
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Quarter-to-Date Chargeoffs, Net of Recoveries
As a percent of average managed consumer
receivables, annualized, excludes commercial.
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Real estate secured .41% .47% .58%
Auto finance 4.45 4.28 4.55
MasterCard/Visa 5.23 5.57 6.15
Private label 5.28 5.43 5.60
Other unsecured 7.00 7.68 7.06
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Total 3.47 % 3.74% 4.09%
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Nonperforming Assets
($ millions) 9/30/00 6/30/00 9/30/99
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Nonaccrual managed receivables ...........$1,984.1 $1,841.8 $1,803.5
Accruing managed receivables
90 or more days delinquent ........... 802.8 753.9 751.5
Renegotiated commercial loans ............ 12.3 12.3 12.3
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Total nonperforming managed receivables .. 2,799.2 2,608.0 2,567.3
Real estate owned ........................ 336.9 323.6 234.4
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Total nonperforming assets ...............$3,136.1 $2,931.6 $2,801.7
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Managed credit loss reserves as a percent
of nonperforming managed receivables. 106.7% 113.0% 101.5%
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Credit Loss Reserves
<TABLE>
<CAPTION>
($ millions) 9/30/00 6/30/00 9/30/99
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reserves for owned receivables
at beginning of quarter ...........$1,986.5 $ 1,909.7 $1,737.6
Provision for credit losses .......... 524.4 495.6 438.1
Chargeoffs, net of recoveries ........ (474.9) (474.0) (441.3)
Other, net ........................... (26.8) 55.2 15.9
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Reserves for owned receivables
at end of quarter 2,009.2 1,986.5 1,750.3
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Credit loss reserves for receivables
serviced with limited recourse
at beginning of quarter ........... 961.7 951.4 786.4
Provision for credit losses .......... 250.5 248.7 302.9
Chargeoffs, net of recoveries ........ (229.3) (241.9) (236.3)
Other, net ........................... (6.1) 3.5 2.5
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Credit loss reserves for receivables
serviced with limited recourse at
end of quarter .................... 976.8 961.7 855.5
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Total managed credit loss reserves
at end of quarter ................$ 2,986.0 $ 2,948.2 $2,605.8
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Credit loss reserves:
Owned ........................ $2,009.2 3.11%(1)$1,986.5 3.24%(1) $1,750.3 3.55%(1)
Serviced with limited recourse 976.8 5.18 961.7 5.18 855.5 4.63
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Total managed credit loss reserves $2,986.0 3.58% $2,948.2 3.69% $2,605.8 3.84%
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(1) % Columns: comparisons to appropriate receivables.
</TABLE>
