HSBC Finance Corp 3Q06 8K
HSBC Holdings PLC
13 November 2006
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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: NOVEMBER 13, 2006
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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, 60070
ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(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 nine months ended September 30, 2006. 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) Shell company transactions.
(d) Exhibits.
NO. EXHIBIT
--- -------
99 Quarterly Financial Supplement for the quarter ended September 30, 2006
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 and Deputy General
Counsel-Corporate
Dated: November 13, 2006
EXHIBIT 99
HSBC FINANCE CORPORATION
QUARTERLY FINANCIAL SUPPLEMENT -- SEPTEMBER 30, 2006
INDEX PAGE NO.
----- --------
Basis of Reporting.................................................. 2
Consolidated Statements of Income -- Owned Basis:
Three Months...................................................... 3
Nine Months....................................................... 4
Receivables Analysis................................................ 5
Financial Highlights -- Managed Basis:
Three Months...................................................... 6
Nine Months....................................................... 7
Credit Quality/Credit Loss Reserves -- Managed Basis................ 8
Reconciliations to GAAP Financial Measures:
Revenues, Average Interest-Earning Assets and Net Interest Income:
Three Months................................................... 9
Nine Months.................................................... 10
Selected Financial Ratios......................................... 11
Credit Quality/Credit Loss Reserves:
Two-Months-and-Over Contractual Delinquency.................... 12
Quarter-to-Date Charge-offs, Net of Recoveries................. 12
Real Estate Charge-offs and REO Expense........................ 14
Credit Loss Reserves........................................... 15
Nonperforming Assets........................................... 15
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 have historically monitored our operations and
evaluated 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. This is 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 and make certain
decisions about allocating resources such as 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 related 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 fixed income investors have also
historically evaluated 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 such investors and other
interested parties to better understand the performance and quality of our
entire 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 have fallen over time,
managed basis and owned basis results have now largely converged. As a result,
we currently anticipate that we will not furnish managed basis Quarterly
Financial Supplements after this Form 8-K relating to the third quarter 2006. We
also now report "Management Basis" results (a non-GAAP financial measure) in
Reports on Form 8-K on an IFRSs basis with our quarterly results. Management
Basis reporting, in addition to managed basis adjustments, assumes the private
label and real estate secured receivables transferred to HBUS have not been sold
and remain on balance sheet. As we continue to manage and service receivables
sold to HBUS, we make decisions about allocating certain resources, such as
employees, on a Management Basis.
2
HSBC Finance Corporation
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CONSOLIDATED STATEMENTS OF INCOME -- OWNED BASIS
THREE MONTHS
% CHANGE FROM
THREE MONTHS ENDED PRIOR
--------------------------- -------------
9/30/06 6/30/06 9/30/05 QTR. YEAR
--------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income.............. $4,535 $4,311 $3,402 5.2% 33.3%
Interest expense:
HSBC affiliates.............................. 283 173 222 63.6 27.5
Non-affiliates............................... 1,650 1,589 1,017 3.8 62.2
------ ------ ------ ----- -----
NET INTEREST INCOME............................ 2,602 2,549 2,163 2.1 20.3
Provision for credit losses.................... 1,384 1,248 1,361 10.9 1.7
------ ------ ------ ----- -----
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES....................................... 1,218 1,301 802 (6.4) 51.9
------ ------ ------ ----- -----
Other revenues:
Securitization related revenue............... 24 51 41 (52.9) (41.5)
Insurance revenue............................ 280 226 274 23.9 2.2
Investment income............................ 31 34 33 (8.8) (6.1)
Derivative income (expense).................. 68 (7) (53) 100+ 100+
Fee income................................... 559 442 439 26.5 27.3
Enhancement services revenue................. 129 130 71 (.8) 81.7
Taxpayer financial services revenue.......... 4 20 (1) (80.0) 100+
Gain on receivable sales to HSBC affiliates.. 101 97 99 4.1 2.0
Servicing and other fees from HSBC
affiliates................................ 121 116 109 4.3 11.0
Other income................................. 48 90 135 (46.7) (64.4)
------ ------ ------ ----- -----
TOTAL OTHER REVENUES........................... 1,365 1,199 1,147 13.8 19.0
------ ------ ------ ----- -----
Costs and expenses:
Salaries and employee benefits............... 571 564 513 1.2 11.3
Sales incentives............................. 94 98 117 (4.1) (19.7)
Occupancy and equipment expenses............. 78 79 83 (1.3) (6.0)
Other marketing expenses..................... 197 176 196 11.9 .5
Other servicing and administrative expenses.. 318 246 194 29.3 63.9
Support services from HSBC affiliates........ 261 270 226 (3.3) 15.5
Amortization of intangibles.................. 63 63 90 -- (30.0)
Policyholders' benefits...................... 123 107 109 15.0 12.8
------ ------ ------ ----- -----
TOTAL COSTS AND EXPENSES....................... 1,705 1,603 1,528 6.4 11.6
------ ------ ------ ----- -----
Income before income tax expense............... 878 897 421 (2.1) 100+
Income tax expense............................. 327 329 140 (.6) 100+
------ ------ ------ ----- -----
NET INCOME..................................... $ 551 $ 568 $ 281 (3.0)% 96.1%
====== ====== ====== ===== =====
SECURITIZATION RELATED REVENUE
THREE MONTHS ENDED
---------------------------
9/30/06 6/30/06 9/30/05
----------------------------------------------------------------------------------------
(IN MILLIONS)
Net initial gains(1)....................................... $-- $-- $--
Net replenishment gains(1)................................. 4 4 38
Servicing revenue and excess spread........................ 20 47 3
--- --- ---
Total...................................................... $24 $51 $41
=== === ===
--------
(1) Net of our estimate of probable credit losses under the recourse
provisions.
3
HSBC Finance Corporation
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CONSOLIDATED STATEMENTS OF INCOME -- OWNED BASIS
NINE MONTHS
NINE MONTHS ENDED
----------------------------
9/30/06 9/30/05 % CHANGE
-------------------------------------------------------------------------------------
(dollars are in millions)
Finance and other interest income...................... $12,933 $9,491 36.3%
Interest expense:
HSBC affiliates...................................... 609 507 20.1
Non-affiliates....................................... 4,709 2,898 62.5
------- ------ -----
NET INTEREST INCOME.................................... 7,615 6,086 25.1
Provision for credit losses............................ 3,498 3,233 8.2
------- ------ -----
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES.. 4,117 2,853 44.3
------- ------ -----
Other revenues:
Securitization related revenue....................... 146 180 (18.9)
Insurance revenue.................................... 779 809 (3.7)
Investment income.................................... 99 99 --
Derivative income.................................... 118 283 (58.3)
Fee income........................................... 1,393 1,099 26.8
Enhancement services revenue......................... 363 201 80.6
Taxpayer financial services revenue.................. 258 260 (.8)
Gain on receivable sales to HSBC affiliates.......... 283 308 (8.1)
Servicing and other fees from HSBC affiliates........ 355 329 7.9
Other income......................................... 221 250 (11.6)
------- ------ -----
TOTAL OTHER REVENUES................................... 4,015 3,818 5.2
------- ------ -----
Costs and expenses:
Salaries and employee benefits....................... 1,716 1,536 11.7
Sales incentives..................................... 272 289 (5.9)
Occupancy and equipment expenses..................... 240 252 (4.8)
Other marketing expenses............................. 546 561 (2.7)
Other servicing and administrative expenses.......... 847 680 24.6
Support services from HSBC affiliates................ 783 652 20.1
Amortization of intangibles.......................... 206 280 (26.4)
Policyholders' benefits.............................. 348 347 .3
------- ------ -----
TOTAL COSTS AND EXPENSES............................... 4,958 4,597 7.9
------- ------ -----
Income before income tax expense....................... 3,174 2,074 53.0
Income tax expense..................................... 1,167 695 67.9
------- ------ -----
NET INCOME............................................. $ 2,007 $1,379 45.5%
======= ====== =====
SECURITIZATION RELATED REVENUE
NINE MONTHS ENDED
-----------------
9/30/06 9/30/05
------------------------------------------------------------------------------------
(in millions)
Net initial gains(1)............................................. $ -- $ --
Net replenishment gains(1)....................................... 23 135
Servicing revenue and excess spread.............................. 123 45
---- ----
Total............................................................ $146 $180
==== ====
--------
(1) Net of our estimate of probable credit losses under the recourse
provisions.
4
HSBC Finance Corporation
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RECEIVABLES ANALYSIS
END-OF-PERIOD RECEIVABLES
% CHANGE FROM
PRIOR
-------------
9/30/06 6/30/06 9/30/05 QTR. YEAR
-------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
OWNED RECEIVABLES:
Real estate secured...................... $ 95,241 $ 93,893 $ 78,130 1.4% 21.9%
Auto finance............................. 12,182 11,723 10,137 3.9 20.2
MasterCard/Visa.......................... 25,856 24,959 18,974 3.6 36.3
Private label............................ 2,431 2,522 2,777 (3.6) (12.5)
Personal non-credit card................. 21,034 20,664 18,484 1.8 13.8
Commercial and other..................... 185 198 220 (6.6) (15.9)
-------- -------- -------- ----- -----
Total owned receivables.................... 156,929 153,959 128,722 1.9 21.9
-------- -------- -------- ----- -----
RECEIVABLES SERVICED WITH LIMITED RECOURSE:
Auto finance............................. 479 693 1,474 (30.9) (67.5)
MasterCard/Visa.......................... 500 750 3,615 (33.3) (86.2)
Personal non-credit card................. 295 468 1,670 (37.0) (82.3)
-------- -------- -------- ----- -----
Total receivables serviced with limited
recourse................................. 1,274 1,911 6,759 (33.3) (81.2)
-------- -------- -------- ----- -----
MANAGED RECEIVABLES:(1)
Real estate secured...................... 95,241 93,893 78,130 1.4 21.9
Auto finance............................. 12,661 12,416 11,611 2.0 9.0
MasterCard/Visa.......................... 26,356 25,709 22,589 2.5 16.7
Private label............................ 2,431 2,522 2,777 (3.6) (12.5)
Personal non-credit card(2).............. 21,329 21,132 20,154 .9 5.8
Commercial and other..................... 185 198 220 (6.6) (15.9)
-------- -------- -------- ----- -----
Total managed receivables.................. $158,203 $155,870 $135,481 1.5% 16.8%
======== ======== ======== ===== =====
--------
(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.
(2) Personal non-credit card receivables are comprised of the following:
9/30/06 6/30/06 9/30/05
------------------------------------------------------------------------------
(IN MILLIONS)
Domestic personal unsecured...................... $13,478 $12,943 $11,571
Union Plus personal unsecured.................... 252 267 374
Personal homeowner loans......................... 4,319 4,334 4,360
Foreign unsecured................................ 3,280 3,588 3,849
------- ------- -------
Total............................................ $21,329 $21,132 $20,154
======= ======= =======
5
HSBC Finance Corporation
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FINANCIAL HIGHLIGHTS -- MANAGED BASIS(1)
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
THREE MONTHS
% CHANGE FROM
THREE MONTHS ENDED PRIOR
------------------------------------------------------ -------------
9/30/06 (2) 6/30/06 (2) 9/30/05 (2) QTR. YEAR
-----------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest
income..................... $ 4,597 11.48% $ 4,413 11.34% $ 3,671 10.89% 4.2% 25.2%
Interest expense............. 1,958 4.89 1,797 4.62 1,331 3.95 9.0 47.1
-------- ----- -------- ----- -------- ----- ----- -----
NET INTEREST INCOME.......... 2,639 6.59% 2,616 6.72% 2,340 6.94% .9 12.8
Provision for credit losses.. 1,384 1,219 1,338 13.5 3.4
-------- -------- -------- ----- -----
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT
LOSSES..................... $ 1,255 $ 1,397 $ 1,002 (10.2)% 25.2%
======== ======== ======== ===== =====
Other revenues:
Insurance revenue............ $ 280 $ 226 $ 274 23.9% 2.2%
Investment income............ 31 34 33 (8.8) (6.1)
Fee income................... 575 468 497 22.9 15.7
Securitization related
revenue.................... (29) (71) (217) (59.2) (86.6)
Derivative income (expense).. 68 (7) (53) 100+ 100+
Enhancement services
revenue.................... 129 130 71 (.8) 81.7
Taxpayer financial services
revenue.................... 4 20 (1) (80.0) 100+
Gain on receivable sales to
HSBC
affiliates................... 101 97 99 4.1 2.0
Servicing and other fees from
HSBC affiliates............ 121 116 109 4.3 11.0
Other income................. 48 90 135 (46.7) (64.4)
-------- -------- -------- ----- -----
TOTAL OTHER REVENUES......... $ 1,328 $ 1,103 $ 947 20.4% 40.2%
======== ======== ======== ===== =====
Average managed receivables
Real estate secured.......... $ 94,864 $ 91,347 $ 74,369 3.9% 27.6%
Auto finance................. 12,543 12,222 11,230 2.6 11.7
MasterCard/Visa.............. 26,170 25,476 22,536 2.7 16.1
Private label................ 2,499 2,510 2,840 (.4) (12.0)
Personal non-credit card..... 21,313 20,979 19,944 1.6 6.9
Commercial and other......... 188 202 234 (6.9) (19.7)
Purchase accounting fair
value adjustments.......... (14) 14 116 (100+) (100+)
-------- -------- -------- ----- -----
Average managed receivables.. $157,563 $152,750 $131,269 3.2% 20.0%
Average noninsurance
investments................ 1,941 2,189 2,868 (11.3) (32.3)
Other interest-earning
assets..................... 711 702 680 1.3 4.6
-------- -------- -------- ----- -----
Average managed interest-
earning assets............. $160,215 $155,641 $134,817 2.9% 18.8%
======== ======== ======== ===== =====
SELECTED FINANCIAL RATIOS:
Return on average managed
assets..................... 1.26% 1.34% .75% (6.0)% 68.0%
Efficiency ratio............. 41.16 41.42 44.65 .6 7.8
Net interest margin.......... 6.59 6.72 6.94 (1.9) (5.0)
Risk adjusted revenue........ 6.88 6.88 7.47 -- (7.9)
======== ======== ======== ===== =====
--------
(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
6
HSBC Finance Corporation
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FINANCIAL HIGHLIGHTS -- MANAGED BASIS(1)
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
NINE MONTHS
NINE MONTHS ENDED
-----------------------------------
9/30/06 (2) 9/30/05 (2) % CHANGE
---------------------------------------------------------------------------------------------
(dollars are in millions)
Finance and other interest income............ $ 13,241 11.35% $ 10,550 10.81% 25.5%
Interest expense............................. 5,419 4.64 3,706 3.80 46.2
-------- ----- -------- ----- -----
NET INTEREST INCOME.......................... 7,822 6.71% 6,844 7.01% 14.3
Provision for credit losses.................. 3,477 3,292 5.6
-------- -------- -----
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES.............................. $ 4,345 $ 3,552 22.3%
======== ======== =====
Other revenues:
Insurance revenue............................ $ 779 $ 809 (3.7)%
Investment income............................ 99 99 --
Fee income................................... 1,465 1,322 10.8
Securitization related revenue............... (154) (742) (79.2)
Derivative income............................ 118 283 (58.3)
Enhancement services revenue................. 363 201 80.6
Taxpayer financial services revenue.......... 258 260 (.8)
Gain on receivable sales to HSBC affiliates.. 283 308 (8.1)
Servicing and other fees from HSBC
affiliates................................. 355 329 7.9
Other income................................. 221 250 (11.6)
-------- -------- -----
TOTAL OTHER REVENUES......................... $ 3,787 $ 3,119 21.4%
======== ======== =====
Average managed receivables
Real estate secured.......................... $ 90,959 $ 70,383 29.2%
Auto finance................................. 12,258 10,658 15.0
MasterCard/Visa.............................. 25,707 22,177 15.9
Private label................................ 2,504 3,028 (17.3)
Personal non-credit card..................... 21,006 19,833 5.9
Commercial and other......................... 199 267 (25.5)
Purchase accounting fair value adjustments... 15 151 (90.1)
-------- -------- -----
Average managed receivables.................. $152,648 $126,497 20.7%
Average noninsurance investments............. 2,192 2,966 (26.1)
Other interest-earning assets................ 702 673 4.3
-------- -------- -----
Average managed interest-earning assets...... $155,542 $130,136 19.5%
======== ======== =====
SELECTED FINANCIAL RATIOS:
Return on average managed assets............. 1.57% 1.26% 24.6%
Efficiency ratio............................. 40.94 44.20 7.4
Net interest margin.......................... 6.71 7.01 (4.3)
Risk adjusted revenue........................ 7.17 7.45 (3.8)
======== ======== =====
--------
(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.
7
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. 9/30/06 6/30/06 9/30/05
----------------------------------------------------------------------------------------
Real estate secured........................................ 2.98% 2.52% 2.51%
Auto finance............................................... 2.67 2.43 2.67
MasterCard/Visa............................................ 4.48 4.10 4.13
Private label.............................................. 5.61 5.42 5.22
Personal non-credit card................................... 9.74 9.00 9.36
---- ---- ----
TOTAL...................................................... 4.16% 3.70% 3.87%
==== ==== ====
QUARTER-TO-DATE CHARGE-OFFS, NET OF RECOVERIES
AS A PERCENT OF AVERAGE MANAGED CONSUMER RECEIVABLES,
ANNUALIZED, EXCLUDES COMMERCIAL. 9/30/06 6/30/06 9/30/05
----------------------------------------------------------------------------------------
Real estate secured........................................ .98% .97% .75%
Auto finance............................................... 4.00 2.73 4.41
MasterCard/Visa............................................ 5.49 5.73 6.11
Private label.............................................. 5.65 5.29 5.35
Personal non-credit card................................... 7.82 7.97 8.15
---- ---- ----
TOTAL...................................................... 2.97% 2.94% 3.21%
==== ==== ====
Real estate charge-offs and REO expense as a percent of
average managed real estate secured receivables.......... 1.11% 1.04% .88%
==== ==== ====
CREDIT LOSS RESERVES
9/30/06 6/30/06 9/30/05
-------------------------------------------------------------------------------------
(in millions)
Reserves for managed receivables at beginning of
quarter............................................... $ 4,740 $ 4,629 $ 4,281
Provision for credit losses............................. 1,384 1,219 1,338
Charge-offs............................................. (1,369) (1,282) (1,185)
Recoveries.............................................. 201 161 133
Other, net.............................................. (10) 13 4
------- ------- -------
Reserves for managed receivables at end of quarter...... $ 4,946 $ 4,740 $ 4,571
======= ======= =======
Reserves as a percent of managed receivables............ 3.13% 3.04% 3.37%
------- ------- -------
NONPERFORMING ASSETS
9/30/06 6/30/06 9/30/05
---------------------------------------------------------------------------------------
(in millions)
Nonaccrual managed receivables............................ $4,183 $3,675 $3,541
Accruing managed receivables 90 or more days delinquent... 842 770 604
Renegotiated commercial loans............................. 1 1 --
------ ------ ------
Total nonperforming managed receivables................... 5,026 4,446 4,145
Real estate owned......................................... 740 620 462
------ ------ ------
TOTAL NONPERFORMING ASSETS................................ $5,766 $5,066 $4,607
====== ====== ======
Managed credit loss reserves as a percent of nonperforming
managed receivables..................................... 98.4% 106.6% 110.3%
--------
(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.
8
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
THREE MONTHS
THREE
THREE MONTHS ENDED 9/30/06 THREE MONTHS ENDED 6/30/06 MONTHS
----------------------------------- ----------------------------------- ENDED
SERVICED WITH SERVICED WITH 9/30/05
LIMITED LIMITED --------
OWNED RECOURSE(1) MANAGED OWNED RECOURSE(1) MANAGED OWNED
---------------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest
income....................... $ 4,535 $ 62 $ 4,597 $ 4,311 $ 102 $ 4,413 $ 3,402
Interest expense............... 1,933 25 1,958 1,762 35 1,797 1,239
-------- ------ -------- -------- ------ -------- --------
NET INTEREST INCOME............ 2,602 37 2,639 2,549 67 2,616 2,163
Provision for credit losses.... 1,384 -- 1,384 1,248 (29) 1,219 1,361
-------- ------ -------- -------- ------ -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES.. $ 1,218 $ 37 $ 1,255 $ 1,301 $ 96 $ 1,397 $ 802
Other revenues:
Securitization related
revenue................... $ 24 $ (53) $ (29) $ 51 $ (122) $ (71) $ 41
Insurance revenue............ 280 -- 280 226 -- 226 274
Investment income............ 31 -- 31 34 -- 34 33
Fee income................... 559 16 575 442 26 468 439
Derivative income (expense).. 68 -- 68 (7) -- (7) (53)
Enhancement services
revenue................... 129 -- 129 130 -- 130 71
Taxpayer financial services
revenue................... 4 -- 4 20 -- 20 (1)
Gain on receivable sales to
HSBC affiliates........... 101 -- 101 97 -- 97 99
Servicing and other fees from
HSBC affiliates........... 121 -- 121 116 -- 116 109
Other income................. 48 -- 48 90 -- 90 135
-------- ------ -------- -------- ------ -------- --------
TOTAL OTHER REVENUES........... $ 1,365 $ (37) $ 1,328 $ 1,199 $ (96) $ 1,103 $ 1,147
Average receivables:
Real estate secured.......... $ 94,864 $ -- $ 94,864 $ 91,347 $ -- $ 91,347 $ 74,369
Auto finance................. 11,960 583 12,543 11,419 803 12,222 9,585
MasterCard/Visa.............. 25,637 533 26,170 24,224 1,252 25,476 18,442
Private label................ 2,499 -- 2,499 2,510 -- 2,510 2,840
Personal non-credit card..... 20,936 377 21,313 20,414 565 20,979 17,904
Commercial and other......... 188 -- 188 202 -- 202 234
Purchase accounting fair
value adjustments......... (14) -- (14) 14 -- 14 116
-------- ------ -------- -------- ------ -------- --------
Average receivables............ $156,070 $1,493 $157,563 $150,130 $2,620 $152,750 $123,490
Average noninsurance
investments.................. 1,941 -- 1,941 2,189 -- 2,189 2,868
Other interest-earning assets.. 711 -- 711 702 -- 702 680
-------- ------ -------- -------- ------ -------- --------
Average interest-earning
assets....................... $158,722 $1,493 $160,215 $153,021 $2,620 $155,641 $127,038
Net interest income as a
percentage of average
interest-earning assets...... 6.56% 9.91% 6.59% 6.66% 10.23% 6.72% 6.81%
======== ====== ======== ======== ====== ======== ========
THREE MONTHS ENDED
9/30/05
-----------------------
SERVICED WITH
LIMITED
RECOURSE(1) MANAGED
--------------------------------------------------------
Finance and other interest
income....................... $ 269 $ 3,671
Interest expense............... 92 1,331
------ --------
NET INTEREST INCOME............ 177 2,340
Provision for credit losses.... (23) 1,338
------ --------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES.. $ 200 $ 1,002
Other revenues:
Securitization related
revenue................... $ (258) $ (217)
Insurance revenue............ -- 274
Investment income............ -- 33
Fee income................... 58 497
Derivative income (expense).. -- (53)
Enhancement services
revenue................... -- 71
Taxpayer financial services
revenue................... -- (1)
Gain on receivable sales to
HSBC affiliates........... -- 99
Servicing and other fees from
HSBC affiliates........... -- 109
Other income................. -- 135
------ --------
TOTAL OTHER REVENUES........... $ (200) $ 947
Average receivables:
Real estate secured.......... $ -- $ 74,369
Auto finance................. 1,645 11,230
MasterCard/Visa.............. 4,094 22,536
Private label................ -- 2,840
Personal non-credit card..... 2,040 19,944
Commercial and other......... -- 234
Purchase accounting fair
value adjustments......... -- 116
------ --------
Average receivables............ $7,779 $131,269
Average noninsurance
investments.................. -- 2,868
Other interest-earning assets.. -- 680
------ --------
Average interest-earning
assets....................... $7,779 $134,817
Net interest income as a
percentage of average
interest-earning assets...... 9.10% 6.94%
====== ========
--------
(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 related
revenue in our owned statements of income into the appropriate caption.
9
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
REVENUES, AVERAGE INTEREST-EARNING ASSETS AND NET INTEREST INCOME
NINE MONTHS
NINE MONTHS ENDED 9/30/06 NINE MONTHS ENDED 9/30/05
----------------------------------- ----------------------------------
SERVICED WITH SERVICED
LIMITED WITH LIMITED
OWNED RECOURSE(1) MANAGED OWNED RECOURSE(1) MANAGED
--------------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
Finance and other interest income........ $ 12,933 $ 308 $ 13,241 $ 9,491 $ 1,059 $ 10,550
Interest expense......................... 5,318 101 5,419 3,405 301 3,706
-------- ------ -------- -------- ------- --------
NET INTEREST INCOME...................... 7,615 207 7,822 6,086 758 6,844
Provision for credit losses.............. 3,498 (21) 3,477 3,233 59 3,292
-------- ------ -------- -------- ------- --------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES.......................... $ 4,117 $ 228 $ 4,345 $ 2,853 $ 699 $ 3,552
Other revenues:
Securitization related revenue......... $ 146 $ (300) $ (154) $ 180 $ (922) $ (742)
Insurance revenue...................... 779 -- 779 809 -- 809
Investment income...................... 99 -- 99 99 -- 99
Fee income............................. 1,393 72 1,465 1,099 223 1,322
Derivative income...................... 118 -- 118 283 -- 283
Enhancement services revenue........... 363 -- 363 201 -- 201
Taxpayer financial services revenue.... 258 -- 258 260 -- 260
Gain on receivable sales to HSBC
affiliates.......................... 283 -- 283 308 -- 308
Servicing and other fees from HSBC
affiliates.......................... 355 -- 355 329 -- 329
Other income........................... 221 -- 221 250 -- 250
-------- ------ -------- -------- ------- --------
TOTAL OTHER REVENUES..................... $ 4,015 $ (228) $ 3,787 $ 3,818 $ (699) $ 3,119
Average receivables:
Real estate secured.................... $ 90,959 $ -- $ 90,959 $ 70,353 $ 30 $ 70,383
Auto finance........................... 11,437 821 12,258 8,625 2,033 10,658
MasterCard/Visa........................ 24,575 1,132 25,707 16,716 5,461 22,177
Private label.......................... 2,504 -- 2,504 3,028 -- 3,028
Personal non-credit card............... 20,420 586 21,006 17,069 2,764 19,833
Commercial and other................... 199 -- 199 267 -- 267
Purchase accounting fair value
adjustments......................... 15 -- 15 151 -- 151
-------- ------ -------- -------- ------- --------
Average receivables...................... $150,109 $2,539 $152,648 $116,209 $10,288 $126,497
Average noninsurance investments......... 2,192 -- 2,192 2,966 -- 2,966
Other interest-earning assets............ 702 -- 702 673 -- 673
-------- ------ -------- -------- ------- --------
Average interest-earning assets.......... $153,003 $2,539 $155,542 $119,848 $10,288 $130,136
Net interest income as a percentage of
average interest-earning assets........ 6.64% 10.87% 6.71% 6.77% 9.82% 7.01%
======== ====== ======== ======== ======= ========
--------
(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 related
revenue in our owned statements of income into the appropriate caption.
10
HSBC Finance Corporation
--------------------------------------------------------------------------------
RECONCILIATION TO GAAP FINANCIAL MEASURES
SELECTED FINANCIAL RATIOS
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------ -------------------
9/30/06 6/30/06 9/30/05 9/30/06 9/30/05
-----------------------------------------------------------------------------------------------
(dollars are in millions)
RETURN ON AVERAGE COMMON SHAREHOLDER'S
EQUITY:
Net income............................... $ 551 $ 568 $ 281 $ 2,007 $ 1,379
Dividends on preferred stock........... (9) (9) (25) (27) (62)
-------- -------- -------- -------- --------
Net income available to common
shareholders........................... $ 542 $ 559 $ 256 $ 1,980 $ 1,317
Average common shareholder's equity...... $ 20,131 $ 19,975 $ 16,973 $ 19,828 $ 16,605
-------- -------- -------- -------- --------
Return on average common shareholder's
equity................................. 10.77% 11.19% 6.03% 13.31% 10.58%
======== ======== ======== ======== ========
RETURN ON AVERAGE ASSETS:
Net income............................... $ 551 $ 568 $ 281 $ 2,007 $ 1,379
Average assets:
Owned basis......................... $172,746 $167,505 $141,765 $167,647 $136,185
Serviced with limited recourse...... 1,493 2,620 7,779 2,539 10,288
-------- -------- -------- -------- --------
Managed basis....................... $174,239 $170,125 $149,544 $170,186 $146,473
Return on average owned assets........... 1.28% 1.36% .79% 1.60% 1.35%
Return on average managed assets......... 1.26 1.34 .75 1.57 1.26
======== ======== ======== ======== ========
EFFICIENCY RATIO:
Total costs and expenses less
policyholders' benefits................ $ 1,582 $ 1,496 $ 1,419 $ 4,610 $ 4,250
-------- -------- -------- -------- --------
Net interest income and other revenues
less policyholders' benefits:
Owned basis......................... $ 3,844 $ 3,641 $ 3,201 $ 11,282 $ 9,557
Serviced with limited recourse...... -- (29) (23) (21) 59
-------- -------- -------- -------- --------
Managed basis....................... $ 3,844 $ 3,612 $ 3,178 $ 11,261 $ 9,616
-------- -------- -------- -------- --------
Owned basis efficiency ratio............. 41.16% 41.09% 44.33% 40.86% 44.47%
Managed basis efficiency ratio........... 41.16 41.42 44.65 40.94 44.20
======== ======== ======== ======== ========
MANAGED BASIS RISK ADJUSTED REVENUE:
Net interest income...................... $ 2,639 $ 2,616 $ 2,340 $ 7,822 $ 6,844
Other revenues, excluding securitization
related revenue as well as the mark-to-
market on derivatives which do not
qualify as effective hedges and
ineffectiveness associated with
qualifying hedges under SFAS No. 133... 1,285 1,183 1,230 3,825 3,624
Less: Net charge-offs.................... (1,168) (1,121) (1,052) (3,279) (3,198)
-------- -------- -------- -------- --------
Risk adjusted revenue.................... $ 2,756 $ 2,678 $ 2,518 $ 8,368 $ 7,270
-------- -------- -------- -------- --------
Average interest-earning assets.......... $160,215 $155,641 $134,817 $155,542 $130,136
-------- -------- -------- -------- --------
Managed basis risk adjusted revenue...... 6.88% 6.88% 7.47% 7.17% 7.45%
======== ======== ======== ======== ========
11
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 NET AVERAGE NET
CONTRACTUAL RECEIVABLES CONTRACTUAL CHARGE- CONSUMER CHARGE-
DELINQUENCY OUTSTANDING DELINQUENCY(1) OFFS RECEIVABLES OFFS(1)
-------------------------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
SEPTEMBER 30, 2006
OWNED:
First mortgage.............. $ 1 $ 16 8.13% $ -- $ 17 --%
Real estate secured......... 2,840 95,241 2.98 232 94,864 .98
Auto finance................ 310 12,182 2.54 110 11,960 3.69
MasterCard/Visa............. 1,170 25,856 4.53 354 25,637 5.52
Private label............... 136 2,431 5.61 35 2,499 5.65
Personal non-credit card.... 2,038 21,034 9.69 407 20,936 7.77
------ -------- ----- ------ -------- -----
Total....................... $6,495 $156,760 4.14% $1,138 $155,913 2.92%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Auto finance................ $ 28 $ 479 5.85% $ 15 $ 583 10.29%
MasterCard/Visa............. 11 500 2.20 5 533 3.75
Personal non-credit card.... 39 295 13.22 10 377 10.61
------ -------- ----- ------ -------- -----
Total....................... $ 78 $ 1,274 6.12% $ 30 $ 1,493 8.04%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage.............. $ 1 $ 16 8.13% $ -- $ 17 --%
Real estate secured......... 2,840 95,241 2.98 232 94,864 .98
Auto finance................ 338 12,661 2.67 125 12,543 4.00
MasterCard/Visa............. 1,181 26,356 4.48 359 26,170 5.49
Private label............... 136 2,431 5.61 35 2,499 5.65
Personal non-credit card.... 2,077 21,329 9.74 417 21,313 7.82
------ -------- ----- ------ -------- -----
Total....................... $6,573 $158,034 4.16% $1,168 $157,406 2.97%
====== ======== ===== ====== ======== =====
JUNE 30, 2006
OWNED
First mortgage.............. $ 1 $ 18 6.76% $ -- $ 19 .96%
Real estate secured......... 2,368 93,893 2.52 222 91,347 .97
Auto finance................ 264 11,723 2.25 69 11,419 2.43
MasterCard/Visa............. 1,037 24,959 4.16 351 24,224 5.80
Private label............... 137 2,522 5.42 33 2,510 5.29
Personal non-credit card.... 1,845 20,664 8.93 404 20,414 7.92
------ -------- ----- ------ -------- -----
Total....................... $5,652 $153,779 3.68% $1,079 $149,933 2.88%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Auto finance................ $ 37 $ 693 5.34% $ 14 $ 803 6.97%
MasterCard/Visa............. 17 750 2.27 13 1,252 4.15
Personal non-credit card.... 56 468 11.97 14 565 9.91
------ -------- ----- ------ -------- -----
Total....................... $ 110 $ 1,911 5.76% $ 41 $ 2,620 6.26%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage.............. $ 1 $ 18 6.76% $ -- $ 19 .96%
Real estate secured......... 2,368 93,893 2.52 222 91,347 .97
Auto finance................ 301 12,416 2.43 83 12,222 2.73
MasterCard/Visa............. 1,054 25,709 4.10 364 25,476 5.73
Private label............... 137 2,522 5.42 33 2,510 5.29
Personal non-credit card.... 1,901 21,132 9.00 418 20,979 7.97
------ -------- ----- ------ -------- -----
Total....................... $5,762 $155,690 3.70% $1,120 $152,553 2.94%
====== ======== ===== ====== ======== =====
--------
(1) Certain percentages may not recompute from the dollar figures presented
due to rounding.
12
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 NET AVERAGE NET
CONTRACTUAL RECEIVABLES CONTRACTUAL CHARGE- CONSUMER CHARGE-
DELINQUENCY OUTSTANDING DELINQUENCY(1) OFFS RECEIVABLES OFFS(1)
------------------------------------------------------------------------------------------------------------
(dollars are in millions)
SEPTEMBER 30, 2005
OWNED:
First mortgage.............. $ 1 $ 22 6.04% $ -- $ 23 --%
Real estate secured......... 1,961 78,130 2.51 140 74,369 .75
Auto finance................ 212 10,137 2.09 78 9,585 3.25
MasterCard/Visa............. 846 18,974 4.46 288 18,442 6.24
Private label............... 145 2,777 5.22 38 2,840 5.35
Personal non-credit card.... 1,696 18,484 9.18 358 17,904 8.01
------ -------- ----- ------ -------- -----
Total....................... $4,861 $128,524 3.78% $ 902 $123,163 2.93%
====== ======== ===== ====== ======== =====
SERVICED WITH LIMITED
RECOURSE:
Auto finance................ $ 98 $ 1,474 6.65% $ 46 $ 1,645 11.19%
MasterCard/Visa............. 87 3,615 2.41 56 4,094 5.47
Personal non-credit card.... 191 1,670 11.44 48 2,040 9.41
------ -------- ----- ------ -------- -----
Total....................... $ 376 $ 6,759 5.56% $ 150 $ 7,779 7.71%
====== ======== ===== ====== ======== =====
MANAGED:
First mortgage.............. $ 1 $ 22 6.04% $ -- $ 23 --%
Real estate secured......... 1,961 78,130 2.51 140 74,369 .75
Auto finance................ 310 11,611 2.67 124 11,230 4.41
MasterCard/Visa............. 933 22,589 4.13 344 22,536 6.11
Private label............... 145 2,777 5.22 38 2,840 5.35
Personal non-credit card.... 1,887 20,154 9.36 406 19,944 8.15
------ -------- ----- ------ -------- -----
Total....................... $5,237 $135,283 3.87% $1,052 $130,942 3.21%
====== ======== ===== ====== ======== =====
--------
(1) Certain percentages may not recompute from the dollar figures presented due
to rounding.
13
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 SEPTEMBER 30, 2006
Real estate charge-offs and REO expense............. $ 263 $ -- $ 263
Average real estate secured receivables............. 94,864 -- 94,864
------- ---- -------
Real estate charge-offs and REO expense as a
percentage of average real estate secured
receivables(1).................................... 1.11% -- 1.11%
======= ==== =======
THREE MONTHS ENDED JUNE 30, 2006
Real estate charge-offs and REO expense............. $ 238 $ -- $ 238
Average real estate secured receivables............. 91,347 -- 91,347
------- ---- -------
Real estate charge-offs and REO expense as a
percentage of average real estate secured
receivables(1).................................... 1.04% -- 1.04%
======= ==== =======
THREE MONTHS ENDED SEPTEMBER 30, 2005
Real estate charge-offs and REO expense............. $ 163 $ -- $ 163
Average real estate secured receivables............. 74,369 -- 74,369
------- ---- -------
Real estate charge-offs and REO expense as a
percentage of average real estate secured
receivables(1).................................... .88% -- .88%
======= ==== =======
--------
(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)
SERVICED WITH
OWNED LIMITED RECOURSE MANAGED
-------------------------------------------------------------------------------------------
(DOLLARS ARE IN MILLIONS)
CREDIT LOSS RESERVES:
THREE MONTHS ENDED SEPTEMBER 30, 2006
Reserves for receivables at beginning of quarter... $ 4,649 $ 91 $ 4,740
Provision for credit losses........................ 1,384 -- 1,384
Charge-offs, net of recoveries..................... (1,138) (30) (1,168)
Other, net......................................... (10) -- (10)
-------- ------ --------
Reserves for receivables at end of quarter......... $ 4,885 $ 61 $ 4,946
Receivables........................................ $156,929 $1,274 $158,203
Credit loss reserves as a percent of receivables... 3.11% 4.79% 3.13%
-------- ------ --------
THREE MONTHS ENDED JUNE 30, 2006
Reserves for receivables at beginning of quarter... $ 4,468 $ 161 $ 4,629
Provision for credit losses........................ 1,248 (29) 1,219
Charge-offs, net of recoveries..................... (1,080) (41) (1,121)
Other, net......................................... 13 -- 13
-------- ------ --------
Reserves for receivables at end of quarter......... $ 4,649 $ 91 $ 4,740
Receivables........................................ $153,959 $1,911 $155,870
Credit loss reserves as a percent of receivables... 3.02% 4.76% 3.04%
-------- ------ --------
THREE MONTHS ENDED SEPTEMBER 30, 2005
Reserves for receivables at beginning of quarter... $ 3,756 $ 525 $ 4,281
Provision for credit losses........................ 1,361 (23) 1,338
Charge-offs, net of recoveries..................... (902) (150) (1,052)
Other, net......................................... 5 (1) 4
-------- ------ --------
Reserves for receivables at end of quarter......... $ 4,220 $ 351 $ 4,571
Receivables........................................ $128,722 $6,759 $135,481
Credit loss reserves as a percent of receivables... 3.28% 5.19% 3.37%
-------- ------ --------
NONPERFORMING ASSETS:
SEPTEMBER 30, 2006
Nonaccrual receivables............................. $ 4,124 $ 59 $ 4,183
Accruing receivables 90 or more days delinquent.... 835 7 842
Renegotiated commercial loans...................... 1 -- 1
-------- ------ --------
Total nonperforming receivables.................... 4,960 66 5,026
Real estate owned.................................. 740 -- 740
-------- ------ --------
Total nonperforming assets......................... $ 5,700 $ 66 $ 5,766
Credit loss reserves as a percent of nonperforming
receivables...................................... 98.5% -- 98.4%
-------- ------ --------
JUNE 30, 2006
Nonaccrual receivables............................. $ 3,595 $ 80 $ 3,675
Accruing receivables 90 or more days delinquent.... 758 12 770
Renegotiated commercial loans...................... 1 -- 1
-------- ------ --------
Total nonperforming receivables.................... 4,354 92 4,446
Real estate owned.................................. 620 -- 620
-------- ------ --------
Total nonperforming assets......................... $ 4,974 $ 92 $ 5,066
Credit loss reserves as a percent of nonperforming
receivables...................................... 106.8% -- 106.6%
-------- ------ --------
SEPTEMBER 30, 2005
Nonaccrual receivables............................. $ 3,273 $ 268 $ 3,541
Accruing receivables 90 or more days delinquent.... 563 41 604
Renegotiated commercial loans...................... -- -- --
-------- ------ --------
Total nonperforming receivables.................... 3,836 309 4,145
Real estate owned.................................. 462 -- 462
-------- ------ --------
Total nonperforming assets......................... $ 4,298 $ 309 $ 4,607
Credit loss reserves as a percent of nonperforming
receivables...................................... 110.0% -- 110.3%
-------- ------ --------
15
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