Household International Reports
Highest Full Year and Quarterly EPS In its History;
Tenth Consecutive Record Quarter
o Full year earnings per share up 16 percent, to $3.55
o Full year net income rises to $1.7 billion
o Receivables up 22 percent for the year to $87.6billion
o Fourth quarter earnings per share up 12 percent to $1.03
o Receivables grow $4.2 billion, or 5 percent, in the quarter
Prospect Heights, IL, January 17, 2001 -- Household International (NYSE:
HI) today reported full year earnings per share of $3.55, a 16 percent increase
over $3.07 a year ago and the highest earnings per share in the company's
122-year history. Net income totaled $1.7 billion, or 14 percent above the prior
year.
Net managed revenues for the full year increased 18 percent to $8.9
billion, compared to $7.5 billion in 1999.
Household's fourth quarter earnings per share rose 12 percent to a record
$1.03, from $.92 a year ago. Fourth quarter net income rose 12 percent to an
all-time high of $492.7 million, compared with $438.8 million a year ago.
"These strong fourth quarter results cap off a terrific year in which we
delivered on all of our earnings and growth goals," said William F. Aldinger,
Household's chairman and chief executive officer. "Growth and profitability in
the quarter were excellent, while credit quality and our balance sheet remained
strong. Since we merged with Beneficial, we have achieved 10 consecutive record
quarters, which is a tribute to the contribution that acquisition has made to
the performance of the company."
Commenting on the full year results, Aldinger continued, "Our record
earnings per share reflect strong top-line growth and improved credit quality.
At the same time, we made significant investments in our technology and human
capital that enhance our ability to achieve sustainable and consistent
revenue and receivables growth. We have built a powerful franchise that is
capable of delivering 13 to 15 percent annual earnings per share growth."
<PAGE>
Fourth Quarter Review
Receivable Growth
Household's managed portfolio grew $4.2 billion, or 5 percent, in the
fourth quarter, and 22 percent over the prior year. Growth within the quarter
was strong across all consumer product lines, most notably in real estate
secured and MasterCard/Visa receivables. The domestic consumer finance business
grew $1.9 billion or 4 percent in the fourth quarter. Almost 75 percent of this
growth was in real estate secured receivables. The company's MasterCard/Visa
portfolio grew $1.2 billion or 7 percent in the quarter, with the strongest
results in the GM Card and Union Privilege portfolios.
Revenues
Strong year-over-year growth in net interest income and credit card fees
drove a 20 percent increase in managed-basis revenues, to $2.4 billion in the
fourth quarter.
Net interest margin of $1.7 billion increased 17 percent from a year ago,
due to strong receivable volumes. The company's managed net interest margin in
percentage terms was 8.01 percent compared to 7.95 percent in the third quarter
and 8.29 percent a year ago. The company's risk adjusted revenue (net interest
margin and fees less chargeoffs) expanded to 7.60 percent from 7.45 percent in
the prior quarter and 7.57 percent a year ago.
Managed fee income increased 17 percent from a year ago, principally
reflecting higher levels of credit card fees.
Managed basis securitization related revenue was up substantially from both
a year ago and the prior quarter, primarily reflecting higher securitization
volumes. Nevertheless, the effect on net income was comparable with both prior
periods, due to adding to loss reserves for the higher level of receivables
sold.
Operating Expenses
Operating expenses in the quarter rose 18 percent from the prior year.
Higher salary expense and sales force incentive compensation drove the increase,
consistent with the company's strong loan growth. The efficiency ratio was 30.8
percent in the fourth quarter of 2000, compared to 31.3 percent a year ago.
Credit Quality and Loss Reserves
The fourth quarter annualized managed net chargeoff ratio improved for the
third consecutive quarter to 3.41 percent from 3.47 percent in the third
quarter. The fourth quarter chargeoff ratio was 55 basis points lower than a
year ago and reached its lowest level since the fourth quarter of 1996. The
managed delinquency ratio (60+days) at December 31, 2000 was 4.20 percent,
stable with 4.21 percent in the third quarter and 46 basis points better than a
year ago.
<PAGE>
Managed credit loss reserves totaled $3.2 billion, up $208 million from
September 30. The ratio of reserves-to-managed receivables was 3.65 percent at
December 31, compared to 3.58 percent at September 30 and 3.72 percent a year
ago. Reserves to nonperforming loans were 107.0 percent at year-end 2000
compared to 106.7 percent at September 30 and 100.1 percent in the prior year.
At December 31, 2000, real estate secured receivables, which have lower credit
loss potential, comprised 42 percent of the portfolio, compared to 38 percent a
year ago.
The ratio of tangible equity to tangible managed assets improved to 7.41
percent at December 31, 2000 from 6.96 percent a year earlier.
Full Year Highlights
o Managed receivables increased over $15.9 billion, or 22 percent in 2000,
with strongest growth in real estate secured receivables.
o Managed revenues increased almost $1.4 billion, or 18 percent, exceeding
$8.9 billion.
o Throughout the year, the company made investments to support the growth of
its franchise, including spending for personnel, technology, e-commerce and
marketing. As a result, operating expenses for the full year increased 20
percent. The efficiency ratio for 2000 was 34.2 percent compared to 33.6
percent in 1999.
o The company's full year chargeoff ratio improved 49 basis points to 3.64
percent.
o Risk adjusted revenue for the year was 7.55 percent compared to 7.37
percent in 1999.
Share Repurchase Program
In connection with its $2 billion share repurchase program, announced on
March 9, 1999, the company bought back 1.8 million shares in the fourth quarter,
totaling $76 million. Household repurchased a total of 5.4 million shares in
2000. At December 31, 2000 the company had agreements with third parties to
purchase, on a forward basis, approximately 7.2 million shares of its common
stock at a weighted average price of $42 per share.
Notice of Live Webcast
Household will broadcast its fourth quarter earnings teleconference call
live over the Internet on its website at www.household.com. The call will begin
today at 9:00 am Central Standard Time on January 17, 2001. A replay will also
be available shortly after the end of the call.
Household International, through its subsidiaries, is a leading provider of
consumer finance, credit card, auto finance and credit insurance products in the
United States, United Kingdom and Canada. In the United States, Household
operates under the two oldest and most recognized names in consumer finance -
HFC and Beneficial. Household is also one of the nation's largest issuers of
private-label and general purpose credit cards, including the GM Card and the
AFL-CIO's Union Privilege card. For more information, visit the company's web
site at http://www.household.com.
This press release contains certain estimates and projections that may be
forward-looking in nature, as defined by the Private Securities Litigation
Reform Act of 1995. A variety of factors may cause actual results to differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference are discussed in Household
International's periodic reports that are filed with the SEC.
# # #
CONTACTS:
Craig A. Streem, Vice President -- Investor Relations, 847-564-6053,
Celeste M. Murphy, Director -- Investor Relations, 847-564-7568,
both of Household International
QUARTERLY FINANCIAL SUPPLEMENT
December 31, 2000 - Quarterly Highlights
------------------------------------------------------------------------------
Summary Managed Income Statement % Change from Prior
-------------------
($ millions) 12/31/00 9/30/00 12/31/99 Qtr. Year
------------------------------------------------------------------------------
Managed-basis net interest
margin and other revenues(1) $2,434.7 $2,213.4 $2,030.6 10.0% 19.9%
Managed-basis provision for
credit losses (1) 917.0 774.9 738.1 18.3 24.2
Operating expenses 748.9 747.7 634.7 0.2 18.0
-----------------------------------------------------------------------------
Income before income taxes 768.8 690.8 657.8 11.3 16.9
Income taxes 276.1 239.6 219.0 15.2 26.1
-----------------------------------------------------------------------------
Net income $ 492.7 $ 451.2 $ 438.8 9.2 12.3
-----------------------------------------------------------------------------
Common Stock Data
-----------------------------------------------------------------------------
Basic earnings per common share $ 1.05 $ .95 $ .93 10.5% 12.9%
Diluted earnings per common share 1.03 .94 .92 9.6 12.0
-----------------------------------------------------------------------------
Average common shares (millions) 471.1 472.4 468.7 (0.3) 0.5
Average common and equivalent shares
(millions) 476.1 477.6 472.7 (0.3) 0.7
-----------------------------------------------------------------------------
Common stock price:
High $ 56.94 $ 57.44 $48.00 (0.9) 18.6
Low 43.88 41.00 35.81 7.0 22.5
Period end 55.00 56.63 37.25 (2.9) 47.7
-----------------------------------------------------------------------------
Dividends declared per common share$ .19 $ .19 $ .17 - 11.8
Book value per common share 16.88 16.00 13.79 5.5 22.4
------------------------------------------------------------------------------
Key Ratios
--------------------------------------------------------------------------------
Return on average common shareholders'
equity 25.4% 24.2% 27.5% 5.0 ( 7.6)%
Return on average owned assets 2.61 2.48 2.96 5.2 (11.8)
Return on average managed assets 2.09 1.98 2.25 5.6 (7.1)
Managed efficiency ratio 30.8 33.8 31.3 (8.9) (1.6)
Managed net interest margin 8.01 7.95 8.29 0.8 (3.4)
Total shareholders' equity as a percent
of managed assets 9.07 9.06 8.72 0.1 4.0
Tangible equity to tangible managed
assets 7.41 7.33 6.96 1.1 6.5
-------------------------------------------------------------------------------
(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
-------------------------------------------------------------------------------
Twelve Month Highlights
Summary Managed Income Statement Twelve Months Ended
--------------------
($ millions) 12/31/00 12/31/99 % Change
------------------------------------------------------------------------------
Managed-basis net interest margin and other
revenues (1) $ 8,905.8 $7,529.8 18.3%
Managed-basis provision for credit losses (1) 3,252.4 2,781.8 16.9
Operating expenses 3,042.9 2,527.3 20.4
--------------------------------------------------------------------------------
Income before income taxes 2,610.5 2,220.7 17.6
Income taxes 909.8 734.3 23.9
--------------------------------------------------------------------------------
Net income $ 1,700.7 $1,486.4 14.4
--------------------------------------------------------------------------------
Common Stock Data
--------------------------------------------------------------------------------
Basic earnings per common share $ 3.59 $ 3.10 15.8%
Diluted earnings per common share 3.55 3.07 15.6
--------------------------------------------------------------------------------
Average common shares (millions) 471.8 477.0 (1.1)
Average common and equivalent shares (millions) 476.2 481.8 (1.2)
--------------------------------------------------------------------------------
Common stock price:
High $ 57.44 $ 52.31 9.8
Low 29.50 35.81 (17.6)
Period end 55.00 37.25 47.7
--------------------------------------------------------------------------------
Dividends declared per common share $ .74 $ .68 8.8
--------------------------------------------------------------------------------
<PAGE>
Key Ratios
------------------------------------------------------------------------------
Return on average common shareholders' equity 23.4% 23.5% (0.4)%
Return on average owned assets 2.44 2.64 (7.6)
Return on average managed assets 1.93 1.99 (3.0)
Managed efficiency ratio 34.2 33.6 1.8
Managed net interest margin 8.10 8.23 (1.6)
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME - OWNED BASIS
% Change
Three Months from Prior
-------------------------------------------------------------------------------
($ millions) 12/31/00 9/30/00 12/31/99 Qtr. Year
-------------------------------------------------------------------------------
Finance income $ 2,408.0 $2,262.1 $ 1,773.2 6.4% 35.8%
Other interest income 7.6 8.3 8.1 (8.4) (6.2)
Interest expense 1,117.0 1,057.2 762.8 5.7 46.4
-------------------------------------------------------------------------------
Net interest margin 1,298.6 1,213.2 1,018.5 7.0 27.5
Provision for credit losses
on owned receivables 574.8 524.4 453.2 9.6 26.8
-------------------------------------------------------------------------------
Net interest margin after
provision for credit losses 723.8 688.8 565.3 5.1 28.0
-------------------------------------------------------------------------------
Securitization revenue 394.7 379.9 398.2 3.9 (0.9)
Insurance revenues 147.7 146.7 129.2 0.7 14.3
Investment income 47.0 43.9 40.8 7.1 15.2
Fee income 234.4 216.2 174.3 8.4 34.5
Other income 33.5 30.1 43.8 11.3 (23.5)
-------------------------------------------------------------------------------
Total other revenues 857.3 816.8 786.3 5.0 9.0
-------------------------------------------------------------------------------
Salaries and fringe benefits 355.5 333.0 270.2 6.8 31.6
Sales incentives 50.3 53.1 37.0 (5.3) 35.9
Occupancy and equipment expense 77.1 78.4 70.9 (1.7) 8.7
Other marketing expenses 104.3 108.2 106.0 (3.6) (1.6)
Other servicing and administrative
expenses 122.8 136.0 114.5 (9.7) 7.2
Amortization of acquired
intangibles and goodwill 38.9 39.0 36.1 (0.3) 7.8
Policyholders' benefits 63.4 67.1 59.1 (5.5) 7.3
-------------------------------------------------------------------------------
Total costs and expenses 812.3 814.8 693.8 (0.3) 17.1
-------------------------------------------------------------------------------
Income before income taxes 768.8 690.8 657.8 11.3 16.9
Income taxes 276.1 239.6 219.0 15.2 26.1
-------------------------------------------------------------------------------
Net income 492.7 451.2 438.8 9.2 12.3
Preferred dividends (2.3) (2.3) (2.3) - -
-------------------------------------------------------------------------------
Earnings available to common
shareholders 490.4 448.9 $ 436.5 9.2% 12.3%
------------------------------------------------------------------------------
Effective tax rate 35.9% 34.7% 33.3% 3.5% 7.8%
-------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME-OWNED BASIS
Twelve Months
----------------------------------------------------------------------
Twelve Months Ended
-------------------------
($ millions) 12/31/00 12/31/99 % Change
-----------------------------------------------------------------------
Finance income $ 8,660.3 $ 6,549.5 32.2%
Other interest income 34.0 33.4 1.8
Interest expense 3,928.9 2,776.6 41.5
-----------------------------------------------------------------------
Net interest margin 4,765.4 3,806.3 25.2
Provision for credit losses on
owned receivables 2,116.9 1,716.4 23.3
-----------------------------------------------------------------------
Net interest margin after provision
for credit losses 2,648.5 2,089.9 26.7
-----------------------------------------------------------------------
Securitization revenue 1,476.6 1,393.5 6.0
Insurance revenues 561.2 534.6 5.0
Investment income 174.2 168.8 3.2
Fee income 825.8 595.5 38.7
Other income 228.8 223.8 2.2
-----------------------------------------------------------------------
Total other revenues 3,266.6 2,916.2 12.0
-----------------------------------------------------------------------
Salaries and fringe benefits 1,312.1 1,048.7 25.1
Sales incentives 203.6 145.9 39.5
Occupancy and equipment expense 306.6 270.9 13.2
Other marketing expenses 470.9 370.0 27.3
Other servicing and administrative
expenses 589.7 547.9 7.6
Amortization of acquired intangibles
and goodwill 160.0 143.9 11.2
Policyholders' benefits 261.7 258.1 1.4
-----------------------------------------------------------------------
Total costs and expenses 3,304.6 2,785.4 18.6
-----------------------------------------------------------------------
Income before income taxes 2,610.5 2,220.7 17.6
Income taxes 909.8 734.3 23.9
-----------------------------------------------------------------------
Net income 1,700.7 1,486.4 14.4
Preferred dividends (9.2) (9.2) -
-----------------------------------------------------------------------
Earnings available to common
shareholders $ 1,691.5 $ 1,477.2 14.5%
-----------------------------------------------------------------------
Effective tax rate 34.9% 33.1% 5.4%
-----------------------------------------------------------------------
Balance Sheet Data
-------------------------------------------------------------------------------
($ millions) 12/31/00 9/30/00 12/31/99
-------------------------------------------------------------------------------
Owned assets $ 76,706.3 $ 73,728.6 $ 60,749.4
Managed assets 96,955.8 92,596.1 80,188.3
Managed receivables 87,607.4 83,453.9 71,728.3
Debt 64,517.8 61,900.6 50,645.1
Trust originated preferred securities 675.0 675.0 375.0
Preferred stock 164.4 164.4 164.4
Common shareholders' equity 7,951.2 7,550.4 6,450.9
Total shareholders' equity as a percent
of managed assets 9.07% 9.06% 8.72%
Tangible equity to tangible managed assets 7.41 7.33 6.96
-------------------------------------------------------------------------------
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.
<PAGE>
<TABLE>
<CAPTION>
Three Months % Change from Prior
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
($ millions) 12/31/00 (1) 9/30/00 (1) 12/31/99 (1) Qtr. Year
----------------------------------------------------------------------------------------------------------------------------------
Finance and other interest income $ 3,183.5 14.78% $ 3,033.9 14.67% 2,525.1 14.23% 4.9% 26.1%
Interest expense 1,457.1 6.77 1,390.6 6.72 1,055.1 5.94 4.8 38.1
----------------------------------------------------------------------------------------------------------------------------------
Net interest margin 1,726.4 8.01% 1,643.3 7.95% 1,470.0 8.29% 5.1 17.4
Provision for credit losses 917.0 774.9 738.1 18.3 24.2
----------------------------------------------------------------------------------------------------------------------------------
Net interest margin after provision
for credit losses 809.4 868.4 731.9 (6.8) 10.6
----------------------------------------------------------------------------------------------------------------------------------
Insurance revenues 147.7 146.7 129.2 0.7 14.3
Investment income 47.0 43.9 40.8 7.1 15.2
Fee income 404.0 380.3 344.4 6.2 17.3
Securitization related revenue 139.5 36.2 61.5 100+ 100+
Other income 33.5 30.1 43.8 11.3 (23.5)
----------------------------------------------------------------------------------------------------------------------------------
Total other revenues 771.7 637.2 619.7 21.1 24.5
Operating expenses and policyholders'
benefits 812.3 814.8 693.8 (0.3) 17.1
----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 768.8 690.8 657.8 11.3 16.9
Income taxes 276.1 239.6 219.0 15.2 26.1
----------------------------------------------------------------------------------------------------------------------------------
Net income $ 492.7 $ 451.2 438.8 9.2 12.3
----------------------------------------------------------------------------------------------------------------------------------
Average managed receivables:
Real estate secured $ 35,934.4 $ 34,617.3 26,436.8 3.8% 35.9%
Auto finance 4,455.4 4,116.9 2,866.4 8.2 55.4
MasterCard/Visa (2) 16,833.7 16,193.1 15,198.3 4.0 10.8
Private label 11,552.4 11,088.1 10,800.6 4.2 7.0
Other unsecured 15,880.1 15,123.7 13,732.7 5.0 15.6
Commercial and other 620.0 664.3 820.9 (6.7) (24.5)
----------------------------------------------------------------------------------------------------------------------------------
Total 85,276.0 81,803.4 69,855.7 4.2 22.1
Average noninsurance investments 464.9 471.4 692.5 (1.4) (32.9)
Other interest-earning assets 442.5 436.7 421.6 1.3 5.0
----------------------------------------------------------------------------------------------------------------------------------
Average managed interest-earning assets $ 86,183.4 $ 82,711.5 70,969.8 4.2 % 21.4%
----------------------------------------------------------------------------------------------------------------------------------
(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.
</TABLE>
Summary of Securitization Related Revenue
Three Months Ended
-------------------------------------------------------------------------------
($ millions) 12/31/00 9/30/00 12/31/99
-------------------------------------------------------------------------------
Gross gains $ 279.4 $ 142.5 $ 182.6
Amortization (139.9) (106.3) (121.1)
-------------------------------------------------------------------------------
Securitization related revenue 139.5 36.2 61.5
Over the life provision on new transactions 217.3 101.4 142.5
-------------------------------------------------------------------------------
Net effect of securitization activity $ (77.8) $ (65.2) $ (81.0)
-------------------------------------------------------------------------------
Receivables securitized $ 2,793.4 $ 1,705.6 $ 2,069.0
-------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME - MANAGED BASIS
Twelve Months
Twelve Months Ended
------------------------
($ millions) 12/31/00 (1) 12/31/99 (1) % Change
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
Finance and other interest income $ 11,702.7 14.61% $ 9,375.7 13.93% 24.8%
Interest expense 5,212.7 6.51 3,836.5 5.70 35.9
-----------------------------------------------------------------------------------------------------
Net interest margin 6,490.0 8.10% 5,539.2 8.23% 17.2
Provision for credit losses 3,252.4 2,781.8 16.9
-----------------------------------------------------------------------------------------------------
Net interest margin after provision
for credit losses 3,237.6 2,757.4 17.4
-----------------------------------------------------------------------------------------------------
Insurance revenues 561.2 534.6 5.0
Investment income 174.2 168.8 3.2
Fee income 1,470.4 1,205.5 22.0
Securitization related revenue 242.9 116.0 100+
Other income 228.8 223.8 2.2
-----------------------------------------------------------------------------------------------------
Total other revenues 2,677.5 2,248.7 19.1
Operating expenses and policyholders'
benefits 3,304.6 2,785.4 18.6
-----------------------------------------------------------------------------------------------------
Income before income taxes 2,610.5 2,220.7 17.6
Income taxes 909.8 734.3 23.9
-----------------------------------------------------------------------------------------------------
Net income $ 1,700.7 $ 1,486.4 14.4
Average managed receivables:
Real estate secured $ 32,530.2 $ 24,574.5 32.4%
Auto finance 3,842.3 2,370.4 62.1
MasterCard/Visa (2) 16,111.2 15,295.7 5.3
Private label 11,194.2 10,255.9 9.1
Other unsecured 14,760.8 13,008.6 13.5
Commercial and other 693.5 809.6 (14.3)
-----------------------------------------------------------------------------------------------------
Total 79,132.2 66,314.7 19.3
Average noninsurance investments 539.3 558.6 (3.5)
Other interest-earning assets 434.1 416.4 4.3
-----------------------------------------------------------------------------------------------------
Average managed interest-earning assets $ 80,105.6 $ 67,289.7 19.0%
-----------------------------------------------------------------------------------------------------
</TABLE>
Twelve Months Ended
--------------------
($ millions) 12/31/00 12/31/99
----------------------------------------------------------------
Gross gains $ 683.1 $ 493.3
Amortization (440.2) (377.3)
----------------------------------------------------------------
Securitization related revenue 242.9 116.0
Over the life provision on
new transactions 513.0 382.2
----------------------------------------------------------------
Net effect of securitization activity $ (270.1) $ (266.2)
----------------------------------------------------------------
Receivables securitized $ 6,975.0 $ 5,241.0
----------------------------------------------------------------
<TABLE>
<CAPTION>
<PAGE>
RECEIVABLES ANALYSIS % Change
End of Period Managed Receivables from Prior
-----------
($ millions) 12/31/00 9/30/00 12/31/99 Qtr. Year
-------------------------------------------------------------------------------
Real estate secured $ 36,637.5 $ 35,289.0 $ 26,935.5 3.8% 36.0%
Auto finance 4,563.3 4,329.5 3,039.8 5.4 50.1
MasterCard/Visa 17,583.4 16,376.8 15,793.1 7.4 11.3
Private label 11,997.3 11,278.0 11,269.7 6.4 6.5
Other unsecured 16,227.3 15,538.3 13,881.9 4.4 16.9
Commercial and other 598.6 642.3 808.3 (6.8) (25.9)
-------------------------------------------------------------------------------
Managed portfolio $ 87,607.4 $ 83,453.9 $ 71,728.3 5.0% 22.1%
-------------------------------------------------------------------------------
Receivables (% of Managed Portfolio)
Real estate secured 41.8% 42.3% 37.6%
Auto finance 5.2 5.2 4.2
MasterCard/Visa 20.1 19.6 22.0
Private label 13.7 13.5 15.7
Other unsecured (1) 18.5 18.6 19.4
Commercial and other .7 .8 1.1
--------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
--------------------------------------------------------------------------------
End of Period Receivables ($ millions) % Change from Prior
---------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
Owned receivables:
Real estate secured $ 35,179.7 $ 33,595.1 $ 24,661.9 4.7% 42.6%
Auto finance 1,850.6 1,917.7 1,233.5 (3.5) 50.0
MasterCard/Visa 8,053.6 7,203.0 6,314.4 11.8 27.5
Private label 10,347.3 10,128.0 10,119.7 2.2 2.2
Other unsecured 11,328.1 11,100.3 9,151.6 2.1 23.8
Commercial and other 598.6 642.3 808.3 (6.8) (25.9)
-----------------------------------------------------------------------------------------------------------------------------
Total owned receivables 67,357.9 64,586.4 52,289.4 4.3 28.8
-----------------------------------------------------------------------------------------------------------------------------
Accrued finance charges 1,302.6 1,187.2 879.3 9.7 48.1
Credit loss reserve for owned receivables (2,111.9) (2,009.2) (1,757.0) 5.1 20.2
Unearned credit insurance premiums and claims reserves (725.2) (646.0) (569.3) 12.3 27.4
Amounts due and deferred from receivables sales 2,420.6 2,231.2 2,225.6 8.5 8.8
Reserve for receivables serviced with limited recourse (1,082.3) (976.8) (909.6) 10.8 19.0
-----------------------------------------------------------------------------------------------------------------------------
Total owned receivables, net 67,161.7 64,372.8 52,158.4 4.3 28.8
-----------------------------------------------------------------------------------------------------------------------------
Receivables serviced with limited recourse:
Real estate secured 1,457.8 1,693.9 2,273.6 (13.9) (35.9)
Auto finance 2,712.7 2,411.8 1,806.3 12.5 50.2
MasterCard/Visa 9,529.8 9,173.8 9,478.7 3.9 .5
Private label 1,650.0 1,150.0 1,150.0 43.5 43.5
Other unsecured 4,899.2 4,438.0 4,730.3 10.4 3.6
-----------------------------------------------------------------------------------------------------------------------------
Total receivables serviced with limited recourse 20,249.5 18,867.5 19,438.9 7.3 4.2
-----------------------------------------------------------------------------------------------------------------------------
Total managed receivables, net $ 87,411.2 $ 83,240.3 $ 71,597.3 5.0 % 22.1 %
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 4.4% of Household's total
managed portfolio at 12/31/00, 4.1% at 9/30/00, and 3.5% at 12/31/99.
<PAGE>
CREDIT QUALITY / CREDIT LOSS RESERVES
-------------------------------------------------------------------------------
Two-Months-and-Over Contractual Delinquency
-------------------------------------------------------------------------------
As a percent of managed consumer
receivables, excludes commercial 12/31/00 9/30/00 12/31/99
-------------------------------------------------------------------------------
Real estate secured 2.63% 2.77% 3.27%
Auto finance 2.55 2.19 2.43
MasterCard/Visa 3.49 3.48 2.78
Private label 5.48 5.67 5.97
Other unsecured 7.97 7.72 8.81
-------------------------------------------------------------------------------
Total 4.20% 4.21% 4.66%
-------------------------------------------------------------------------------
Quarter-to-Date Chargeoffs, Net of Recoveries
As a percent of average managed consumer receivables,annualized, excludes
commercial.
-------------------------------------------------------------------------------
Real estate secured .41% .41% .54%
Auto finance 5.22 4.45 5.43
MasterCard/Visa 5.83 5.23 5.57
Private label 5.06 5.28 5.88
Other unsecured 5.92 7.00 6.98
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Total 3.41% 3.47% 3.96%
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Nonperforming Assets
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($ millions)
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Nonaccrual managed receivables $2,112.3 $1,984.1 $1,912.6
Accruing managed receivables
90 or more days delinquent 859.8 802.8 739.9
Renegotiated commercial loans 12.3 12.3 12.3
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Total nonperforming managed receivables 2,984.4 2,799.2 2,664.8
Real estate owned 337.1 336.9 271.5
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Total nonperforming assets $3,321.5 $3,136.1 $2,936.3
Managed credit loss reserves as a percent
of nonperforming managed receivables 107.0% 106.7% 100.1%
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Credit Loss Reserves
<TABLE>
<CAPTION>
($ millions) 12/31/00 9/30/00 12/31/99
<S> <C> <C> <C>
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Reserves for owned receivables
at beginning of quarter $ 2,009.2 $ 1,986.5 $ 1,750.3
Provision for credit losses 574.8 524.4 453.2
Chargeoffs, net of recoveries (490.3) (474.9) (455.9)
Other, net 18.2 (26.8) 9.4
Reserves for owned receivables at end of quarter 2,111.9 2,009.2 1,757.0
Credit loss reserves for receivables serviced
with limited recourse at beginning of quarter 976.8 961.7 855.5
Provision for credit losses 342.2 250.5 284.9
Chargeoffs, net of recoveries (231.6) (229.3) (229.2)
Other, net (5.1) (6.1) (1.6)
Credit loss reserves for receivables serviced
with limited recourse at end of quarter 1,082.3 976.8 909.6
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Total managed credit loss reserves at end of quarter $ 3,194.2 $ 2,986.0 $ 2,666.6
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Credit loss reserves:
Owned $ 2,111.9 3.14%(1) $ 2,009.2 3.11%(1) $ 1,757.0 3.36%(1)
Serviced with limited recourse 1,082.3 5.34 976.8 5.18 909.6 4.68
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Total managed credit loss reserves $ 3,194.2 3.65% $ 2,986.0 3.58 % $ 2,666.6 3.72%
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(1) % Columns: comparisons to appropriate receivables.
</TABLE>
