HSBC Fin Corp Q2 2005 8K
HSBC Holdings PLC
01 August 2005
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: AUGUST 1, 2005
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COMMISSION FILE NUMBER 1-8198
HSBC FINANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 86-1052062
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER)
2700 SANDERS ROAD, PROSPECT HEIGHTS, ILLINOIS 60070
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(847) 564-5000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
( ) Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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Financial supplement pertaining to the financial results of HSBC Finance
Corporation for the quarter and six months ended June 30, 2005. The information
included in the financial supplement is presented on a managed basis, which is a
non-GAAP financial measure that assumes that securitized receivables have not
been sold and remain on our balance sheet.
This information shall not be deemed to be "filed" for the purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange
Act), or otherwise incorporated by reference into any filing pursuant to the
Securities Act of 1933, as amended, or the Exchange Act except as otherwise
expressly stated in such a filing.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
NO. EXHIBIT
--- -------
99 Quarterly Financial Supplement for the quarter ended June
30, 2005
SIGNATURE
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Pursuant to the requirement 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.
HSBC FINANCE CORPORATION
(Registrant)
By: /s/ Patrick D. Schwartz
------------------------------------
Patrick D. Schwartz
Vice President-Deputy General
Counsel-Corporate
Dated: August 1, 2005
EXHIBIT 99
HSBC FINANCE CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT -- JUNE 30, 2005
INDEX PAGE NO.
----- --------
Basis of Reporting.......................................... 2
Consolidated Statements of Income -- Owned Basis:
Three Months.............................................. 3
Six Months................................................ 5
Receivables Analysis........................................ 7
Financial Highlights -- Managed Basis:
Three Months.............................................. 8
Six Months................................................ 9
Credit Quality/Credit Loss Reserves -- Managed Basis........ 10
Reconciliations to GAAP Financial Measures:
Revenues, Average Interest-Earning Assets and Net Interest
Income:
Three Months......................................... 11
Six Months........................................... 12
Selected Financial Ratios................................. 13
Credit Quality/Credit Loss Reserves:
Two-Months-and-Over Contractual Delinquency............ 14
Quarter-to-Date Charge-offs, Net of Recoveries......... 14
Real Estate Charge-offs and REO Expense................ 16
Credit Loss Reserves................................... 17
Nonperforming Assets................................... 17
HSBC Finance Corporation
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BASIS OF REPORTING
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NON-GAAP FINANCIAL MEASURES
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This Quarterly Financial Supplement includes financial information which is
presented on a non-GAAP basis as discussed below. Information included in this
Quarterly Financial Supplement is intended to supplement and should not be
considered a substitute for owned basis reporting. This Quarterly Financial
Supplement should be read in conjunction with the owned basis information
reported in our Quarterly Report on Form 10-Q.
See "Reconciliations to GAAP Financial Measures" for quantitative
reconciliations of non-GAAP financial information to the equivalent owned basis
GAAP financial information.
MANAGED BASIS REPORTING We monitor our operations and evaluate trends on a
managed basis (a non-GAAP financial measure), which assumes that securitized
receivables have not been sold and remain on our balance sheet. We manage and
evaluate our operations on a managed basis because the receivables that we
securitize are subjected to underwriting standards comparable to our owned
portfolio, are serviced by operating personnel without regard to ownership and
result in a similar credit loss exposure for us. In addition, we fund our
operations, review our operating results, and make decisions about allocating
resources such as employees and capital on a managed basis.
When reporting on a managed basis, net interest income, provision for
credit losses and fee income related to receivables securitized are reclassified
from securitization revenue in our owned statement of income into the
appropriate caption. Additionally, charge-off and delinquency associated with
these receivables are included in our managed basis credit quality statistics.
Debt analysts, rating agencies and others also evaluate our operations on a
managed basis for the reasons discussed above and have historically requested
managed basis information from us. We believe that managed basis information
enables investors and other interested parties to better understand the
performance and quality of our entire managed loan portfolio and is important to
understanding the quality of originations and the related credit risk inherent
in our owned and securitized portfolios. As the level of our securitized
receivables falls over time, managed basis and owned basis results will
eventually converge.
2
HSBC Finance Corporation
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CONSOLIDATED STATEMENTS OF INCOME -- OWNED BASIS
THREE MONTHS
% CHANGE FROM
THREE MONTHS ENDED PRIOR
--------------------------- -------------
6/30/05 3/31/05 6/30/04 QTR. YEAR
-------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income................... $3,139 $2,950 $2,637 6.4% 19.0%
Interest expense.................................... 1,104 1,062 707 4.0 56.2
------ ------ ------ ----- -----
NET INTEREST INCOME................................. 2,035 1,888 1,930 7.8 5.4
Provision for credit losses......................... 1,031 841 997 22.6 3.4
------ ------ ------ ----- -----
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES............................................ 1,004 1,047 933 (4.1) 7.6
------ ------ ------ ----- -----
Other revenues:
Securitization revenue............................ 54 85 266 (36.5) (79.7)
Insurance revenue................................. 229 221 204 3.6 12.3
Investment income................................. 33 33 30 -- 10.0
Derivative income................................. 76 260 124 (70.8) (38.7)
Fee income........................................ 354 306 242 15.7 46.3
Taxpayer financial services income................ 18 243 6 (92.6) 100+
Other income...................................... 360 314 180 14.6 100.0
------ ------ ------ ----- -----
TOTAL OTHER REVENUES................................ 1,124 1,462 1,052 (23.1) 6.8
------ ------ ------ ----- -----
Costs and expenses:
Salaries and fringe benefits...................... 526 497 457 5.8 15.1
Sales incentives.................................. 90 82 90 9.8 --
Occupancy and equipment expenses.................. 82 87 77 (5.7) 6.5
Other marketing expenses.......................... 185 180 131 2.8 41.2
Other servicing and administrative expenses....... 143 258 198 (44.6) (27.8)
Support services from HSBC affiliates............. 217 209 196 3.8 10.7
Amortization of acquired intangibles.............. 83 107 79 (22.4) 5.1
Policyholders' benefits........................... 116 122 93 (4.9) 24.7
------ ------ ------ ----- -----
TOTAL COSTS AND EXPENSES............................ 1,442 1,542 1,321 (6.5) 9.2
------ ------ ------ ----- -----
Income before income tax expense.................... 686 967 664 (29.1) 3.3
Income tax expense.................................. 214 341 231 (37.2) (7.4)
------ ------ ------ ----- -----
NET INCOME.......................................... $ 472 $ 626 $ 433 (24.6)% 9.0%
====== ====== ====== ===== =====
3
HSBC Finance Corporation
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SECURITIZATION REVENUE
THREE MONTHS ENDED
---------------------------
6/30/05 3/31/05 6/30/04
-----------------------------------------------------------------------------------------
(IN MILLIONS)
Net initial gains(1)........................................ $ -- $ -- $ 22
Net replenishment gains(1).................................. 44 53 113
Servicing revenue and excess spread......................... 10 32 131
----- ----- ----
Total....................................................... $ 54 $ 85 $266
===== ===== ====
---------------
(1) Net of our estimate of probable credit losses under the recourse provisions.
RECEIVABLES SECURITIZED
THREE MONTHS ENDED
---------------------------
6/30/05 3/31/05 6/30/04
-----------------------------------------------------------------------------------------
(IN MILLIONS)
Auto finance................................................ $-- $-- $300
MasterCard/Visa(1).......................................... -- -- 500
Private label............................................... -- -- 190
--- --- ----
Total....................................................... $-- $-- $990
=== === ====
---------------
(1) MasterCard and Visa are registered trademarks of MasterCard International,
Incorporated and VISA USA Inc., respectively.
4
HSBC Finance Corporation
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CONSOLIDATED STATEMENTS OF INCOME -- OWNED BASIS
SIX MONTHS
SIX MONTHS ENDED
----------------------------
6/30/05 6/30/04 % CHANGE
------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income........................... $6,089 $5,165 17.9%
Interest expense............................................ 2,166 1,415 53.1
------ ------ -----
NET INTEREST INCOME......................................... 3,923 3,750 4.6
Provision for credit losses................................. 1,872 1,925 (2.8)
------ ------ -----
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES....... 2,051 1,825 12.4
------ ------ -----
Other revenues:
Securitization revenue.................................... 139 614 (77.4)
Insurance revenue......................................... 450 415 8.4
Investment income......................................... 66 71 (7.0)
Derivative income......................................... 336 176 90.9
Fee income................................................ 660 507 30.2
Taxpayer financial services income........................ 261 212 23.1
Other income.............................................. 674 280 100+
------ ------ -----
TOTAL OTHER REVENUES........................................ 2,586 2,275 13.7
------ ------ -----
Costs and expenses:
Salaries and fringe benefits.............................. 1,023 942 8.5
Sales incentives.......................................... 172 168 2.4
Occupancy and equipment expenses.......................... 169 160 5.6
Other marketing expenses.................................. 365 263 38.8
Other servicing and administrative expenses............... 401 424 (5.4)
Support services from HSBC affiliates..................... 426 373 14.2
Amortization of acquired intangibles...................... 190 195 (2.6)
Policyholders' benefits................................... 238 206 15.5
------ ------ -----
TOTAL COSTS AND EXPENSES.................................... 2,984 2,731 9.3
------ ------ -----
Income before income tax expense............................ 1,653 1,369 20.7
Income tax expense.......................................... 555 466 19.1
------ ------ -----
NET INCOME.................................................. $1,098 $ 903 21.6%
====== ====== =====
5
HSBC Finance Corporation
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SECURITIZATION REVENUE
SIX MONTHS ENDED
-----------------
6/30/05 6/30/04
-------------------------------------------------------------------------------
(IN MILLIONS)
Net initial gains(1)........................................ $ -- $ 25
Net replenishment gains(1).................................. 97 233
Servicing revenue and excess spread......................... 42 356
----- -----
Total....................................................... $ 139 $ 614
===== =====
---------------
(1) Net of our estimate of probable credit losses under the recourse provisions.
RECEIVABLES SECURITIZED
SIX MONTHS ENDED
-----------------
6/30/05 6/30/04
-------------------------------------------------------------------------------
(IN MILLIONS)
Auto finance................................................ $-- $ 300
MasterCard/Visa............................................. -- 550
Private label............................................... -- 190
--- ------
Total....................................................... $-- $1,040
=== ======
6
HSBC Finance Corporation
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RECEIVABLES ANALYSIS
END-OF-PERIOD RECEIVABLES
% CHANGE FROM
PRIOR
---------------
6/30/05 3/31/05 6/30/04 QTR. YEAR
----------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
OWNED RECEIVABLES:
Real estate secured....................... $ 71,930 $ 68,486 $ 56,033 5.0% 28.4%
Auto finance.............................. 8,997 8,107 5,459 11.0 64.8
MasterCard/Visa........................... 17,421 15,554 10,816 12.0 61.1
Private label(1).......................... 2,905 3,130 12,759 (7.2) (77.2)
Personal non-credit card.................. 17,255 16,608 14,019 3.9 23.1
Commercial and other...................... 253 276 346 (8.3) (26.9)
-------- -------- -------- ------ ------
Total owned receivables..................... 118,761 112,161 99,432 5.9 19.4
-------- -------- -------- ------ ------
RECEIVABLES SERVICED WITH LIMITED RECOURSE:
Real estate secured....................... -- 73 176 (100.0) (100.0)
Auto finance.............................. 1,819 2,175 3,877 (16.4) (53.1)
MasterCard/Visa........................... 4,752 6,140 9,345 (22.6) (49.1)
Private label(1).......................... -- -- 4,723 -- (100.0)
Personal non-credit card.................. 2,409 3,098 4,715 (22.2) (48.9)
-------- -------- -------- ------ ------
Total receivables serviced with limited
recourse.................................. 8,980 11,486 22,836 (21.8) (60.7)
-------- -------- -------- ------ ------
MANAGED RECEIVABLES:(2)
Real estate secured....................... 71,930 68,559 56,209 4.9 28.0
Auto finance.............................. 10,816 10,282 9,336 5.2 15.9
MasterCard/Visa........................... 22,173 21,694 20,161 2.2 10.0
Private label(1).......................... 2,905 3,130 17,482 (7.2) (83.4)
Personal non-credit card(3)............... 19,664 19,706 18,734 (.2) 5.0
Commercial and other...................... 253 276 346 (8.3) (26.9)
-------- -------- -------- ------ ------
Total managed receivables................... $127,741 $123,647 $122,268 3.3% 4.5%
======== ======== ======== ====== ======
---------------
(1) On December 29, 2004, all domestic private label receivables were sold to
HSBC Bank USA, N.A.
(2) Managed basis reporting is a non-GAAP financial measure. See "Basis of
Reporting" for a discussion on the use of non-GAAP financial information.
(3) Personal non-credit card receivables are comprised of the following:
6/30/05 3/31/05 6/30/04
---------------------------------------------------------------------------------------
(IN MILLIONS)
Domestic personal unsecured............................... $10,942 $10,736 $ 9,787
Union Plus personal unsecured............................. 387 426 576
Personal homeowner loans.................................. 4,395 4,390 4,556
Foreign unsecured......................................... 3,940 4,154 3,815
------- ------- -------
Total..................................................... $19,664 $19,706 $18,734
======= ======= =======
7
HSBC Finance Corporation
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FINANCIAL HIGHLIGHTS -- MANAGED BASIS(1)
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
THREE MONTHS
% CHANGE
THREE MONTHS ENDED FROM PRIOR
------------------------------------------------------ -------------
6/30/05 (2) 3/31/05 (2) 6/30/04 (2) QTR. YEAR
----------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest
income.......................... $ 3,488 10.75% $ 3,391 10.78% $ 3,416 10.95% 2.9% 2.1%
Interest expense.................. 1,204 3.71 1,171 3.72 834 2.67 2.8 44.4
-------- ----- -------- ----- -------- ----- ----- -----
NET INTEREST INCOME............... 2,284 7.04% 2,220 7.06% 2,582 8.28% 2.9 (11.5)
Provision for credit losses....... 1,083 871 1,145 24.3 (5.4)
-------- -------- -------- ----- -----
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES..... $ 1,201 $ 1,349 $ 1,437 (11.0)% (16.4)%
======== ======== ======== ===== =====
Other revenues:
Insurance revenue................. $ 229 $ 221 $ 204 3.6% 12.3%
Investment income................. 33 33 30 -- 10.0
Fee income........................ 428 397 440 7.8 (2.7)
Securitization revenue............ (217) (308) (436) (29.5) (50.2)
Derivative income................. 76 260 124 (70.8) (38.7)
Taxpayer financial services
income.......................... 18 243 6 (92.6) 100+
Other income...................... 360 314 180 14.6 100.0
-------- -------- -------- ----- -----
TOTAL OTHER REVENUES.............. $ 927 $ 1,160 $ 548 (20.1)% 69.2%
======== ======== ======== ===== =====
Average managed receivables Real
estate secured.................. $ 70,217 $ 66,562 $ 54,398 5.5% 29.1%
Auto finance...................... 10,504 10,242 9,177 2.6 14.5
MasterCard/Visa................... 22,066 21,928 20,212 .6 9.2
Private label..................... 3,017 3,227 17,362 (6.5) (82.6)
Personal non-credit card.......... 19,729 19,827 18,568 (.5) 6.2
Commercial and other.............. 261 306 367 (14.4) (28.6)
Purchase accounting fair value
adjustments..................... 153 184 347 (16.8) (55.9)
-------- -------- -------- ----- -----
Average managed receivables....... $125,947 $122,276 $120,431 3.0% 4.6%
Average noninsurance
investments..................... 3,106 2,927 3,728 6.1 (16.7)
Other interest-earning assets..... 673 666 647 1.1 4.0
-------- -------- -------- ----- -----
Average managed interest-earning
assets.......................... $129,726 $125,869 $124,806 3.1% 3.9%
======== ======== ======== ===== =====
SELECTED FINANCIAL RATIOS:
Return on average managed
assets.......................... 1.30% 1.73% 1.23% (24.9)% 5.7%
Efficiency ratio.................. 42.84 43.59 40.43 (1.7) 6.0
Net interest margin............... 7.04 7.06 8.28 (.3) (15.0)
Risk adjusted revenue............. 7.17 7.34 6.65 (2.3) 7.8
======== ======== ======== ===== =====
---------------
(1) Managed basis reporting is a non-GAAP financial measure. See "Basis of
Reporting" for a discussion on the use of non-GAAP financial information and
"Reconciliations to GAAP Financial Measures" for quantitative
reconciliations to the equivalent GAAP basis financial measure.
(2) % Columns: comparison to average managed interest-earning assets,
annualized.
8
HSBC Finance Corporation
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FINANCIAL HIGHLIGHTS -- MANAGED BASIS(1)
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
SIX MONTHS
SIX MONTHS ENDED
------------------------------------
6/30/05 (2) 6/30/04 (2) % CHANGE
-----------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income............ $ 6,879 10.77% $ 6,833 10.94% .7%
Interest expense............................. 2,375 3.72 1,677 2.68 41.6
-------- ------ -------- ----- -----
NET INTEREST INCOME.......................... 4,504 7.05% 5,156 8.26% (12.6)
Provision for credit losses.................. 1,954 2,326 (16.0)
-------- -------- -----
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES.............................. $ 2,550 $ 2,830 (9.9)%
======== ======== =====
Other revenues:
Insurance revenue.......................... $ 450 $ 415 8.4%
Investment income.......................... 66 71 (7.0)
Fee income................................. 825 901 (8.4)
Securitization revenue..................... (525) (785) (33.1)
Derivative income.......................... 336 176 90.9
Taxpayer financial services income......... 261 212 23.1
Other income............................... 674 280 100+
-------- -------- -----
TOTAL OTHER REVENUES......................... $ 2,087 $ 1,270 64.3%
======== ======== =====
Average managed receivables
Real estate secured........................ $ 68,390 $ 53,281 28.4%
Auto finance............................... 10,373 9,040 14.7
MasterCard/Visa............................ 21,997 20,517 7.2
Private label.............................. 3,122 17,416 (82.1)
Personal non-credit card................... 19,778 18,712 5.7
Commercial and other....................... 283 379 (25.3)
Purchase accounting fair value
adjustments............................. 169 369 (54.2)
-------- -------- -----
Average managed receivables.................. $124,112 119,714 3.7
Average noninsurance investments............. 3,016 4,521 (33.3)
Other interest-earning assets................ 669 644 3.9
-------- -------- -----
Average managed interest-earning assets...... $127,797 $124,879 2.3%
======== ======== =====
SELECTED FINANCIAL RATIOS:
Return on average managed assets............. 1.52% 1.26% 20.6%
Efficiency ratio............................. 43.22 40.59 6.5
Net interest margin.......................... 7.05 8.26 (14.6)
Risk adjusted revenue........................ 7.25 6.77 7.1
-------- -------- -----
---------------
(1) Managed basis reporting is a non-GAAP financial measure. See "Basis of
Reporting" for a discussion on the use of non-GAAP financial information and
"Reconciliations to GAAP Financial Measures" for quantitative
reconciliations to the equivalent GAAP basis financial measure.
(2) % Columns: comparison to average managed interest-earning assets,
annualized.
9
HSBC Finance Corporation
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CREDIT QUALITY/CREDIT LOSS RESERVES -- MANAGED BASIS(1)
TWO-MONTHS-AND-OVER CONTRACTUAL DELINQUENCY
AS A PERCENT OF MANAGED CONSUMER RECEIVABLES, EXCLUDES COMMERCIAL. 6/30/05 3/31/05 6/30/04
-----------------------------------------------------------------------------------------------
Real estate secured............................................ 2.56% 2.64% 3.41%
Auto finance................................................... 2.69 2.26 3.03
MasterCard/Visa................................................ 3.77 3.97 4.21
Private label.................................................. 4.91 4.71 4.81
Personal non-credit card....................................... 9.11 9.16 9.81
---- ---- ----
TOTAL.......................................................... 3.85% 3.93% 4.70%
==== ==== ====
QUARTER-TO-DATE CHARGE-OFFS, NET OF RECOVERIES
AS A PERCENT OF AVERAGE MANAGED CONSUMER RECEIVABLES, ANNUALIZED, EXCLUDES COMMERCIAL. 6/30/05 3/31/05 6/30/04
-------------------------------------------------------------------------------------------------------------------
Real estate secured...................................................... .78% .87% 1.04%
Auto finance............................................................. 3.68 5.82 5.04
MasterCard/Visa.......................................................... 6.49 6.56 7.62
Private label............................................................ 4.36 4.18 4.92
Personal non-credit card................................................. 8.17 8.54 11.00
---- ---- -----
TOTAL.................................................................... 3.28% 3.65% 4.57%
==== ==== =====
Real estate charge-offs and REO expense as a percent of average managed real estate
secured receivables.................................................... .84% 1.01% 1.47%
==== ==== =====
CREDIT LOSS RESERVES
6/30/05 3/31/05 6/30/04
-----------------------------------------------------------------------------------------
(IN MILLIONS)
Reserves for managed receivables at beginning of quarter.... $4,242 $4,515 $5,912
Provision for credit losses................................. 1,083 871 1,145
Charge-offs................................................. (1,162) (1,224) (1,483)
Recoveries.................................................. 134 106 116
Other, net.................................................. (16) (26) 9
------ ------ ------
Reserves for managed receivables at end of quarter.......... $4,281 $4,242 $5,699
====== ====== ======
Reserves as a percent of managed receivables................ 3.35% 3.43% 4.66%
------ ------ ------
NONPERFORMING ASSETS
6/30/05 3/31/05 6/30/04
-----------------------------------------------------------------------------------------
(IN MILLIONS)
Nonaccrual managed receivables.............................. $3,348 $3,387 $3,506
Accruing managed receivables 90 or more days delinquent..... 537 579 1,134
Renegotiated commercial loans............................... 1 1 2
------ ------ ------
Total nonperforming managed receivables..................... 3,886 3,967 4,642
Real estate owned........................................... 459 509 624
------ ------ ------
TOTAL NONPERFORMING ASSETS.................................. $4,345 $4,476 $5,266
====== ====== ======
Managed credit loss reserves as a percent of nonperforming
managed receivables....................................... 110.2% 106.9% 122.8%
---------------
(1) Managed basis reporting is a non-GAAP financial measure. See "Basis of
Reporting" for a discussion on the use of non-GAAP financial information and
"Reconciliations to GAAP Financial Measures" for quantitative
reconciliations to the equivalent GAAP basis financial measure.
10
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
THREE MONTHS
THREE MONTHS ENDED 6/30/05 THREE MONTHS ENDED 3/31/05
----------------------------------- -------------------------------------
SERVICED WITH SERVICED WITH
LIMITED LIMITED
OWNED RECOURSE(1) MANAGED OWNED RECOURSE(1) MANAGED
--------------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income...... $ 3,139 $ 349 $ 3,488 $ 2,950 $ 441 $ 3,391
Interest expense....................... 1,104 100 1,204 1,062 109 1,171
-------- ------- -------- ---------- ------- --------
NET INTEREST INCOME.................... 2,035 249 2,284 1,888 332 2,220
Provision for credit losses............ 1,031 52 1,083 841 30 871
-------- ------- -------- ---------- ------- --------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES........................ $ 1,004 $ 197 $ 1,201 $ 1,047 $ 302 $ 1,349
Other revenues:
Securitization revenue............... $ 54 $ (271) $ (217) $ 85 $ (393) $ (308)
Insurance revenue.................... 229 -- 229 221 -- 221
Investment income.................... 33 -- 33 33 -- 33
Fee income........................... 354 74 428 306 91 397
Derivative income.................... 76 -- 76 260 -- 260
Taxpayer financial services income... 18 -- 18 243 -- 243
Other income......................... 360 -- 360 314 -- 314
-------- ------- -------- ---------- ------- --------
TOTAL OTHER REVENUES................... $ 1,124 $ (197) $ 927 $ 1,462 $ (302) $ 1,160
Average receivables:
Real estate secured.................. $ 70,205 $ 12 $ 70,217 $ 66,485 $ 77 $ 66,562
Auto finance......................... 8,510 1,994 10,504 7,779 2,463 10,242
MasterCard/Visa...................... 16,626 5,440 22,066 15,079 6,849 21,928
Private label........................ 3,017 -- 3,017 3,227 -- 3,227
Personal non-credit card............. 16,972 2,757 19,729 16,332 3,495 19,827
Commercial and other................. 261 -- 261 306 -- 306
Purchase accounting fair value
adjustments........................ 153 -- 153 184 -- 184
-------- ------- -------- ---------- ------- --------
Average receivables.................... $115,744 $10,203 $125,947 $ 109,392 $12,884 $122,276
Average noninsurance investments....... 3,106 -- 3,106 2,927 -- 2,927
Other interest-earning assets.......... 673 -- 673 666 -- 666
-------- ------- -------- ---------- ------- --------
Average interest-earning assets........ $119,523 $10,203 $129,726 $ 112,985 $12,884 $125,869
Net interest income as a percentage of
average interest-earning assets...... 6.81% 9.76% 7.04% 6.68% 10.31% 7.06%
======== ======= ======== ========== ======= ========
THREE MONTHS ENDED 6/30/04
-----------------------------------
SERVICED WITH
LIMITED
OWNED RECOURSE(1) MANAGED
----------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income...... $ 2,637 $ 779 $ 3,416
Interest expense....................... 707 127 834
-------- ------- --------
NET INTEREST INCOME.................... 1,930 652 2,582
Provision for credit losses............ 997 148 1,145
-------- ------- --------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES........................ $ 933 $ 504 $ 1,437
Other revenues:
Securitization revenue............... $ 266 $ (702) $ (436)
Insurance revenue.................... 204 -- 204
Investment income.................... 30 -- 30
Fee income........................... 242 198 440
Derivative income.................... 124 -- 124
Taxpayer financial services income... 6 -- 6
Other income......................... 180 -- 180
-------- ------- --------
TOTAL OTHER REVENUES................... $ 1,052 $ (504) $ 548
Average receivables:
Real estate secured.................. $ 54,220 $ 178 $ 54,398
Auto finance......................... 5,197 3,980 9,177
MasterCard/Visa...................... 10,913 9,299 20,212
Private label........................ 12,249 5,113 17,362
Personal non-credit card............. 13,570 4,998 18,568
Commercial and other................. 367 -- 367
Purchase accounting fair value
adjustments........................ 347 -- 347
-------- ------- --------
Average receivables.................... $ 96,863 $23,568 $120,431
Average noninsurance investments....... 3,728 -- 3,728
Other interest-earning assets.......... 647 -- 647
-------- ------- --------
Average interest-earning assets........ $101,238 $23,568 $124,806
Net interest income as a percentage of
average interest-earning assets...... 7.63% 11.07% 8.28%
======== ======= ========
---------------
(1) When reporting on a managed basis, finance and other interest income,
interest expense, provision for credit losses and fee
income related to securitized receivables are reclassified from
securitization revenue in our owned statements of income
into the appropriate caption.
11
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
SIX MONTHS
SIX MONTHS ENDED 6/30/05 SIX MONTHS ENDED 6/30/04
----------------------------------- ----------------------------------
SERVICED WITH SERVICED
LIMITED WITH LIMITED
OWNED RECOURSE(1) MANAGED OWNED RECOURSE(1) MANAGED
---------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest
income....................... $ 6,089 $ 790 $ 6,879 $ 5,165 $ 1,668 $ 6,833
Interest expense............... 2,166 209 2,375 1,415 262 1,677
-------- ------- -------- -------- ------- --------
NET INTEREST INCOME............ 3,923 581 4,504 3,750 1,406 5,156
Provision for credit losses.... 1,872 82 1,954 1,925 401 2,326
-------- ------- -------- -------- ------- --------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT
LOSSES....................... $ 2,051 $ 499 $ 2,550 $ 1,825 $ 1,005 $ 2,830
Other revenues:
Securitization revenue....... $ 139 $ (664) $ (525) $ 614 $(1,399) $ (785)
Insurance revenue............ 450 -- 450 415 -- 415
Investment income............ 66 -- 66 71 -- 71
Fee income................... 660 165 825 507 394 901
Derivative income............ 336 -- 336 176 -- 176
Taxpayer financial services
income..................... 261 -- 261 212 -- 212
Other income................. 674 -- 674 280 -- 280
-------- ------- -------- -------- ------- --------
TOTAL OTHER REVENUES........... $ 2,586 $ (499) $ 2,087 $ 2,275 $(1,005) $ 1,270
Average receivables:
Real estate secured.......... $ 68,346 $ 44 $ 68,390 $ 53,098 $ 183 $ 53,281
Auto finance................. 8,144 2,229 10,373 4,854 4,186 9,040
MasterCard/Visa.............. 15,853 6,144 21,997 11,021 9,496 20,517
Private label................ 3,122 -- 3,122 12,229 5,187 17,416
Personal non-credit card..... 16,652 3,126 19,778 13,342 5,370 18,712
Commercial and other......... 283 -- 283 379 -- 379
Purchase accounting fair
value adjustments.......... 169 -- 169 369 -- 369
-------- ------- -------- -------- ------- --------
Average receivables............ $112,569 $11,543 $124,112 $ 95,292 $24,422 $119,714
Average noninsurance
investments.................. 3,016 -- 3,016 4,521 -- 4,521
Other interest-earning
assets....................... 669 -- 669 644 -- 644
-------- ------- -------- -------- ------- --------
Average interest-earning
assets....................... $116,254 $11,543 $127,797 $100,457 $24,422 $124,879
Net interest income as a
percentage of average
interest-earning assets...... 6.75% 10.07% 7.05% 7.47% 11.51% 8.26%
======== ======= ======== ======== ======= ========
---------------
(1) When reporting on a managed basis, finance and other interest income,
interest expense, provision for credit losses and fee income related to
securitized receivables are reclassified from securitization revenue in our
owned statements of income into the appropriate caption.
12
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
SELECTED FINANCIAL RATIOS
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ -------------------
6/30/05 3/31/05 6/30/04 6/30/05 6/30/04
----------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
RETURN ON AVERAGE COMMON SHAREHOLDER'S
EQUITY:
Net income.............................. $ 472 $ 626 $ 433 $ 1,098 $ 903
Dividends on preferred stock.......... (19) (18) (18) (37) (36)
-------- -------- -------- -------- --------
Net income available to common
shareholders.......................... $ 453 $ 608 $ 415 $ 1,061 $ 867
-------- -------- -------- -------- --------
Average common shareholder's equity..... $ 16,671 $ 16,170 $ 17,160 $ 16,421 $ 16,903
-------- -------- -------- -------- --------
Return on average common shareholder's
equity................................ 10.87% 15.04% 9.67% 12.92% 10.26%
======== ======== ======== ======== ========
RETURN ON AVERAGE ASSETS:
Net income.............................. $ 472 $ 626 $ 433 $ 1,098 $ 903
-------- -------- -------- -------- --------
Average assets:
Owned basis........................... $134,834 $131,954 $117,467 $133,394 $118,428
Serviced with limited recourse........ 10,203 12,884 23,568 11,543 24,422
-------- -------- -------- -------- --------
Managed basis......................... $145,037 $144,838 $141,035 $144,937 $142,850
Return on average owned assets.......... 1.40% 1.90% 1.47% 1.65% 1.52%
Return on average managed assets........ 1.30 1.73 1.23 1.52 1.26
======== ======== ======== ======== ========
EFFICIENCY RATIO:
Total costs and expenses less
policyholders' benefits............... $ 1,326 $ 1,420 $ 1,228 $ 2,746 $ 2,525
-------- -------- -------- -------- --------
Net interest income and other revenues
less policyholders' benefits: Owned
basis................................. $ 3,043 $ 3,228 $ 2,889 $ 6,271 $ 5,819
Serviced with limited recourse........ 52 30 148 82 401
-------- -------- -------- -------- --------
Managed basis......................... $ 3,095 $ 3,258 $ 3,037 $ 6,353 $ 6,220
-------- -------- -------- -------- --------
Owned basis efficiency ratio............ 43.58% 43.99% 42.51% 43.79% 43.39%
Managed basis efficiency ratio.......... 42.84 43.59 40.43 43.22 40.59
======== ======== ======== ======== ========
MANAGED BASIS RISK ADJUSTED REVENUE:
Net interest income..................... $ 2,284 $ 2,220 $ 2,582 $ 4,504 $ 5,156
Other revenues, excluding securitization
revenue and derivative income......... 1,068 1,208 860 2,276 1,879
Less: Net charge-offs................... (1,028) (1,118) (1,367) (2,146) (2,809)
-------- -------- -------- -------- --------
Risk adjusted revenue................... $ 2,324 $ 2,310 $ 2,075 $ 4,634 $ 4,226
Average interest-earning assets......... $129,726 $125,869 $124,806 $127,797 $124,879
-------- -------- -------- -------- --------
Managed basis risk adjusted revenue..... 7.17% 7.34% 6.65% 7.25% 6.77%
-------- -------- -------- -------- --------
13
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
CREDIT QUALITY/CREDIT LOSS RESERVES
Two-Months-and-Over
Contractual Delinquency Quarter-to-Date Charge-offs,
------------------------------------------ Net of Recoveries
TWO-MONTHS- TWO-MONTHS- ------------------------------------------
AND-OVER CONSUMER AND-OVER AVERAGE
CONTRACTUAL RECEIVABLES CONTRACTUAL NET CONSUMER NET
DELINQUENCY OUTSTANDING DELINQUENCY(1) CHARGE-OFFS RECEIVABLES CHARGE-OFFS(1)
------------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
JUNE 30, 2005
OWNED:
First mortgage......... $ 1 $ 24 6.24% $ -- $ 24 .03%
Real estate secured.... 1,841 71,930 2.56 137 70,205 .78
Auto finance........... 187 8,997 2.08 56 8,510 2.61
MasterCard/Visa........ 722 17,421 4.14 288 16,626 6.93
Private label.......... 143 2,905 4.91 33 3,017 4.36
Personal non-credit
card................. 1,525 17,255 8.84 330 16,972 7.77
------ -------- ----- ------ -------- -----
Total.................. $4,419 $118,532 3.73% $ 844 $115,354 2.93%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Real estate secured.... $ -- $ -- --% $ -- $ 12 --%
Auto finance........... 104 1,819 5.72 41 1,994 8.22
MasterCard/Visa........ 114 4,752 2.40 70 5,440 5.15
Personal non-credit
card................. 266 2,409 11.04 73 2,757 10.59
------ -------- ----- ------ -------- -----
Total.................. $ 484 $ 8,980 5.39% $ 184 $ 10,203 7.21%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage......... $ 1 $ 24 6.24% $ -- $ 24 .03%
Real estate secured.... 1,841 71,930 2.56 137 70,217 .78
Auto finance........... 291 10,816 2.69 97 10,504 3.68
MasterCard/Visa........ 836 22,173 3.77 358 22,066 6.49
Private label.......... 143 2,905 4.91 33 3,017 4.36
Personal non-credit
card................. 1,791 19,664 9.11 403 19,729 8.17
------ -------- ----- ------ -------- -----
Total.................. $4,903 $127,512 3.85% $1,028 $125,557 3.28%
====== ======== ===== ====== ======== =====
MARCH 31, 2005
OWNED:
First mortgage......... $ 1 $ 26 5.25% $ -- $ 26 1.22%
Real estate secured.... 1,797 68,486 2.62 144 66,485 .87
Auto finance........... 134 8,107 1.65 74 7,779 3.80
MasterCard/Visa........ 716 15,554 4.60 270 15,079 7.17
Private label.......... 148 3,130 4.71 34 3,227 4.18
Personal non-credit
card................. 1,433 16,608 8.63 334 16,332 8.18
------ -------- ----- ------ -------- -----
Total.................. $4,229 $111,911 3.78% $ 856 $108,928 3.15%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Real estate secured.... $ 10 $ 73 13.70% $ 1 $ 77 5.19%
Auto finance........... 98 2,175 4.51 75 2,463 12.18
MasterCard/Visa........ 146 6,140 2.38 90 6,849 5.26
Personal non-credit
card................. 372 3,098 12.01 89 3,495 10.19
------ -------- ----- ------ -------- -----
Total.................. $ 626 $ 11,486 5.45% $ 255 $ 12,884 7.92%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage......... $ 1 $ 26 5.25% $ -- $ 26 1.22%
Real estate secured.... 1,807 68,559 2.64 145 66,562 .87
Auto finance........... 232 10,282 2.26 149 10,242 5.82
MasterCard/Visa........ 862 21,694 3.97 360 21,928 6.56
Private label.......... 148 3,130 4.71 34 3,227 4.18
Personal non-credit
card................. 1,805 19,706 9.16 423 19,827 8.54
------ -------- ----- ------ -------- -----
Total.................. $4,855 $123,397 3.93% $1,111 $121,812 3.65%
====== ======== ===== ====== ======== =====
---------------
(1) Certain percentages may not recompute from the dollar figures presented due
to rounding.
14
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
CREDIT QUALITY/CREDIT LOSS RESERVES (CONTINUED)
TWO-MONTHS-AND-OVER CONTRACTUAL DELINQUENCY QUARTER-TO-DATE CHARGE-OFFS,
--------------------------------------------- NET OF RECOVERIES
TWO-MONTHS- TWO-MONTHS- ------------------------------------------
AND-OVER CONSUMER AND-OVER AVERAGE
CONTRACTUAL RECEIVABLES CONTRACTUAL NET CONSUMER NET
DELINQUENCY OUTSTANDING DELINQUENCY(1) CHARGE-OFFS RECEIVABLES CHARGE-OFFS(1)
---------------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
JUNE 30, 2004
OWNED:
First mortgage......... $ 2 $ 29 5.57% $ -- $ 39 3.05%
Real estate secured.... 1,897 56,033 3.39 142 54,220 1.04
Auto finance........... 116 5,459 2.12 40 5,197 3.05
MasterCard/Visa........ 631 10,816 5.83 270 10,913 9.91
Private label.......... 638 12,759 5.00 155 12,249 5.06
Personal non-credit
card................. 1,250 14,019 8.92 359 13,571 10.59
------ -------- ----- ------ -------- -----
Total.................. $4,534 $ 99,115 4.57% $ 966 $ 96,189 4.02%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Real estate secured.... $ 21 $ 176 11.87% $ -- $ 178 .67%
Auto finance........... 167 3,877 4.31 76 3,980 7.64
MasterCard/Visa........ 217 9,345 2.32 115 9,299 4.94
Private label.......... 202 4,723 4.28 59 5,114 4.58
Personal non-credit
card................. 587 4,715 12.45 151 4,997 12.11
------ -------- ----- ------ -------- -----
Total.................. $1,194 $ 22,836 5.23% $ 401 $ 23,568 6.81%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage......... $ 2 $ 29 5.57% $ -- $ 39 3.05%
Real estate secured.... 1,918 56,209 3.41 142 54,398 1.04
Auto finance........... 283 9,336 3.03 116 9,177 5.04
MasterCard/Visa........ 848 20,161 4.21 385 20,212 7.62
Private label.......... 840 17,482 4.81 214 17,363 4.92
Personal non-credit
card................. 1,837 18,734 9.81 510 18,568 11.00
------ -------- ----- ------ -------- -----
Total.................. $5,728 $121,951 4.70% $1,367 $119,757 4.57%
====== ======== ===== ====== ======== =====
---------------
(1) Certain percentages may not recompute from the dollar figures presented due
to rounding.
15
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
CREDIT QUALITY/CREDIT LOSS RESERVES (CONTINUED)
SERVICED WITH
OWNED LIMITED RECOURSE MANAGED
--------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
REAL ESTATE CHARGE-OFFS AND REO EXPENSE:
THREE MONTHS ENDED JUNE 30, 2005
Real estate charge-offs and REO expense..................... $ 147 $ -- $ 147
Average real estate secured receivables..................... 70,205 12 70,217
------- ---- -------
Real estate charge-offs and REO expense as a percentage of
average real estate secured receivables(1)................ .84% -- .84%
======= ==== =======
THREE MONTHS ENDED MARCH 31, 2005
Real estate charge-offs and REO expense..................... $ 168 $ 1 $ 169
Average real estate secured receivables..................... 66,485 77 66,562
------- ---- -------
Real estate charge-offs and REO expense as a percentage of
average real estate secured receivables(1)................ 1.01% -- 1.01%
======= ==== =======
THREE MONTHS ENDED JUNE 30, 2004
Real estate charge-offs and REO expense..................... $ 200 $ -- $ 200
Average real estate secured receivables..................... 54,220 178 54,398
------- ---- -------
Real estate charge-offs and REO expense as a percentage of
average real estate secured receivables(1)................ 1.47% -- 1.47%
======= ==== =======
---------------
(1) Certain percentages may not recompute from the dollar figures presented due
to rounding.
16
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
CREDIT QUALITY/CREDIT LOSS RESERVES (CONTINUED)
SERVICED WITH
OWNED LIMITED RECOURSE MANAGED
----------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
CREDIT LOSS RESERVES:
THREE MONTHS ENDED JUNE 30, 2005
Reserves for receivables at beginning of quarter............ $ 3,581 $ 661 $ 4,242
Provision for credit losses................................. 1,031 52 1,083
Charge-offs, net of recoveries.............................. (844) (184) (1,028)
Other, net.................................................. (12) (4) (16)
-------- ------- --------
Reserves for receivables at end of quarter.................. $ 3,756 $ 525 $ 4,281
Receivables................................................. $118,761 $ 8,980 $127,741
Credit loss reserves as a percent of receivables............ 3.16% 5.85% 3.35%
-------- ------- --------
THREE MONTHS ENDED MARCH 31, 2005
Reserves for receivables at beginning of quarter............ $ 3,625 $ 890 $ 4,515
Provision for credit losses................................. 841 30 871
Charge-offs, net of recoveries.............................. (863) (255) (1,118)
Other, net.................................................. (22) (4) (26)
-------- ------- --------
Reserves for receivables at end of quarter.................. $ 3,581 $ 661 $ 4,242
Receivables................................................. $112,161 $11,486 $123,647
Credit loss reserves as a percent of receivables............ 3.19% 5.75% 3.43%
-------- ------- --------
THREE MONTHS ENDED JUNE 30, 2004
Reserves for receivables at beginning of quarter............ $ 3,753 $ 2,159 $ 5,912
Provision for credit losses................................. 997 148 1,145
Charge-offs, net of recoveries.............................. (965) (402) (1,367)
Other, net.................................................. 10 (1) 9
-------- ------- --------
Reserves for receivables at end of quarter.................. $ 3,795 $ 1,904 $ 5,699
Receivables................................................. $ 99,432 $22,836 $122,268
Credit loss reserves as a percent of receivables............ 3.82% 8.34% 4.66%
-------- ------- --------
NONPERFORMING ASSETS:
JUNE 30, 2005
Nonaccrual receivables...................................... $ 3,008 $ 340 $ 3,348
Accruing receivables 90 or more days delinquent............. 482 55 537
Renegotiated commercial loans............................... 1 -- 1
-------- ------- --------
Total nonperforming receivables............................. 3,491 395 3,886
Real estate owned........................................... 459 -- 459
-------- ------- --------
Total nonperforming assets.................................. $ 3,950 $ 395 $ 4,345
Credit loss reserves as a percent of nonperforming
receivables............................................... 107.6% -- 110.2%
-------- ------- --------
MARCH 31, 2005
Nonaccrual receivables...................................... $ 2,956 $ 431 $ 3,387
Accruing receivables 90 or more days delinquent............. 499 80 579
Renegotiated commercial loans............................... 1 -- 1
-------- ------- --------
Total nonperforming receivables............................. 3,456 511 3,967
Real estate owned........................................... 509 -- 509
-------- ------- --------
Total nonperforming assets.................................. $ 3,965 $ 511 $ 4,476
Credit loss reserves as a percent of nonperforming
receivables............................................... 103.6% -- 106.9%
-------- ------- --------
JUNE 30, 2004
Nonaccrual receivables...................................... $ 2,833 $ 673 $ 3,506
Accruing receivables 90 or more days delinquent............. 849 285 1,134
Renegotiated commercial loans............................... 2 -- 2
-------- ------- --------
Total nonperforming receivables............................. 3,684 958 4,642
Real estate owned........................................... 624 -- 624
-------- ------- --------
Total nonperforming assets.................................. $ 4,308 $ 958 $ 5,266
Credit loss reserves as a percent of nonperforming
receivables............................................... 103.0% -- 122.8%
-------- ------- --------
17
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