SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2000
ARISTAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-3521 95-4128205
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
8900 Grand Oak Circle, Tampa, Florida 33637-1050
(Address of principal executive office)
(813) 632-4500
(Registrant's telephone number including area code)
Item 5. Other Events
On March 1, 2000, registrant changed its name to "Washington Mutual Finance
Corporation."
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Material presented at an investors' conference sponsored by
Donaldson Lufkin and Jenrette Securities Corporation on March 2,
2000.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Washington Mutual Finance Corporation
By: /s/ Fay L. Chapman
Fay L. Chapman
Executive VicePresident
<PAGE>
A Company in Transition
-----------------------
4th Quarter 1999
Financial
Performance
March 3, 2000
Exhibit 99.1
Company Profile
- - Headquartered in Tampa, Florida
- - $3.2 billion in assets
- - $3.1 billion in loans
- - Founded in 1927
- - 538 offices in 25 states
- - 2,766 full time employees
<PAGE>
Product Profile:
- - Personal Unsecured (43%) $1.3 billion
- Average Loan Balance of $2,250
- - Real Estate (47%) $1.5 billion
- 60% First Mortgages and 40% Second Mortgages
- Average Loan-to-Value Approximately 73%
- Average Loan Balance of $27,700
- - Sales Finance (10%) $.3 billion
- 8,767 Dealerships in 25 States
- Average Loan Balance of $825
<PAGE>
The New Look......
[Washington Mutual Finance]
<PAGE>
Strategy - Expand the Reach
- - Expand national "franchise"
- - Reinforce our dominant position in small to mid-size markets
- - Take on our competition in primary markets
- - Diversify distribution beyond retail branch network
- - Pursue acquisitions
<PAGE>
Strategy - Nurture the Franchise
- - Leverage existing customer base by
- Focusing on core products
- Up-selling and cross-selling
- - Promote a sales culture to improve the historically slow receivables growth
rate
- - Eliminate unprofitable ancillary products
<PAGE>
Strategy - Low Cost Producer
- - Target Mid to Low 30's Efficiency Ratio
- - 1999 Restructuring --> 2000
Rationalization
- - Centralization
- - Infrastructure
<PAGE>
Strategy - Strengthen the Center
- - Enhance credit risk capabilities
- - Develop segmentation and target marketing capabilities
- - Manage business mix
- - Maintain financial discipline
<PAGE>
Fourth Quarter 1999 Results
- - Net income increased by $10.7 million (93%) to $22.2 million , compared to
$11.5 million for the 4Q98
- - Return on equity improved from 10.79% in 4Q98 to 19.03%
- - Reserve coverage to charge-offs strengthened during the quarter
- - Operating efficiency ratio improved from 51.26% in 4Q98 to 36.65%
<PAGE>
Fourth Quarter 1999 Results
Income Statement ($ Millions)
<TABLE>
<CAPTION>
Dollar %
4Q99 4Q98 Change Change
----- ----- ------ ------
<S> <C> <C> <C> <C>
Net Interest Income $ 85.1 $ 76.5 $ 8.6 11.2%
Other Income 8.5 7.0 1.5 21.4
--- ---- --- ----
Net Margin $ 93.6 $ 83.5 $ 10.1 12.1
Provision for
loan losses 23.8 21.6 2.2 10.2
G & A Expense 34.3 42.8 ( 8.5) (19.9)
---- ---- ---- ------
Net Income
before taxes $ 35.5 $ 19.1 $ 16.4 85.9
Provision for
income taxes 13.3 7.6 5.7 75.0
---- --- --- ----
Net Income $ 22.2 $ 11.5 $ 10.7 93.0%
</TABLE>
Key Ratios
- ----------
ROAA 2.83% 1.72%
ROE 9.03% 10.79%
Efficiency Ratio 36.65% 51.26%
Net Margin * 11.81% 12.38%
* Defined as net interest income and other income divided by average assets
<PAGE>
1999 Full Year Results
Income Statement ($ Millions)
<TABLE>
<CAPTION>
Dollar %
1999 1998 Change Change
---- ---- ------- --------
<S> <C> <C> <C> <C>
Net Interest Income $325.4 $283.2 $ 42.2 14.9%
Other Inco 29.5 27.1 2.4 8.9
---- ---- --- ---
Net Margin $354.9 $310.3 $ 44.6 14.3
Provision for
loan losses 100.6 79.7 20.9 26.2
G & A Expense 135.6 143.0 (7.4) (5.2)
----- ----- ---- ----
Net Income
before taxes $118.7 $87.6 $ 31.1 35.5
Provision for
income taxes 45.7 34.7 11.0 31.7
---- ---- ---- ----
Net Income $ 73.0 52.9 $20.1 38.0%
</TABLE>
Key Ratios
- ----------
ROAA 2.48% 2.05%
ROE 16.39% 12.70%
Operating Efficiency 38.21% 46.08%
Net Margin 11.88% 11.81%
Net C/O to Average Receivables 2.87% 3.10%
Reserve to Total Loans 3.28% 3.13%
* Defined as net interest income and other income divided by average assets
<PAGE>
1999 Full Year Results
Loans Receivables Growth ($ Millions)
<TABLE>
<CAPTION>
Dollar %
12/31/99 12/31/98 Change Change
----- ----- --- ----
<S> <C> <C> <C> <C>
Real Estate $1,630 $1,270 $360 28.3%
Personal Loans 1,567 1,362 205 15.0
Sales Finance 328 328 0 0.0
--- --- - ---
Total Loans $3,525 $2,960 $565 19.1%
Allowance for
Unearned Income
And
Deferred Charges (464) (385) (79) 20.5
Reserve for
loan losses (100) (81) (19) 23.5
----- ---- ---- ----
Total Loans Net
of Reserves $2,961 $2,494 $467 18.7%
</TABLE>
<PAGE>
Best In Class Comparison
<TABLE>
<CAPTION>
Best In
Aristar Class Peer AVG
------- ----- --------
<S> <C> <C> <C>
ROE 15.01 16.92 13.62
ROA 2.37 2.51 1.98
Growth 16.45 16.45 11.08
Net Margin 11.2 11.2 7.31
Efficiency Ratio 38.9 38.9 48.4
Charge-Off 2.88 1.77 2.70
Delinquency 2.35 1.67 3.29
</TABLE>
Source: SNL Database, Peer Analysis, Financial ratios presented as of September
30, 1999 YTD.
The Peer Group includes American General Finance Corporation, Associates North
America, Household Finance Corporation, Norwest Financial Inc. and Commercial
Credit Company
<PAGE>
Balance Sheet Management
- - Target Capital Structure
- Firm manages capital by targeting debt to tangible equity, current debt
to tangible equity is 6.0%
- We plan to increase leverage modestly over 2000 but will not jeopardize
rating
- Dividend policy is smoothed based on our forecast of receivables growth
and the impact on overall leverage
- WM Finance targets a 25/75 ratio of short-term and long-term corporate
borrowings, currently at a 10/90 ratio
<PAGE>
Debt Ratings
S/T L/T Unsecured
Agency Debt Debt
- -------- ---- ----
Duff & Phelps D-1 A
Fitch IBCA F-1 A
Moody's P-2 A3
Standard & Poors A-2 A-
<PAGE>
Balance Sheet Management
- - Liquidity and Funding Strategy
- Company currently maintains a $1.2 billion fully committed back-up
facility, providing more than 1:1 coverage of short term debt requirements
- Company has filed a shelf registration with the SEC for $1.0 billion and
participated in two recent debt offerings for $250 million and $300 million
to facilitate acquisitions and reduce outstanding commercial paper, leaving
$450 million capacity available
- No further senior issues planned for 1st half of 2000
<PAGE>
Balance Sheet Management
- - Liquidity and Funding Strategy (Cont'd)
- Manage interest rate risk through duration-matching strategy, nominal value
at risk
- No Derivatives
- No Securitizations
<PAGE>
Credit Performance
- - While delinquency %'s are at a 4 year low, the improvement is clearly not
just growth driven. Delinquency and credit quality control remains strong
in the portfolio.
- 30day + delinquency dollar growth in `99 was slower than in 1997 & 1998.
- As of January we have 7,600 less delinquent accounts on the books than
we did same time last year - and the lowest for any January since 1997.
- The first payment default rate for 1999 booked loans outperformed the
1997 and 1998 vintages in every month.
- `99 vintages show continued signs of improvement over prior years.
<PAGE>
Conclusion:
- - A unique investment story
- - Strong historic franchise
- - Excellent fundamental performance
- - A strategy of rapid modernization
- - Makes the credit a relative value
- Current high spread is not justified