AmeriCredit Handily Beats Wall Street View

Updates to add results, closing share price.

Fort Worth, Texas (TheStreet) - AmeriCredit (ACF) recorded a profit of $26 million, or 19 cents a share, for its fiscal first-quarter, widely exceeding Wall Street's consensus earnings estimate for the subprime auto finance lender.

The performance beat the average profit view of analysts polled by Thomson Reuters by 13 cents.

In the same period a year earlier, the company lost $5 million, or 5 cents a share. Last year's quarterly results were revised downward from a loss of $2 million, or 1 cent a share, to reflect the retrospective adoption of new accounting rules related to convertible bonds.

Revenue came in at $413 million, also beating the average analysts' expectation of $375.7 million for the quarter. Still, the total was a decline of 27% from the year-ago period as originations dropped because of the troubled economy and the company's tightening of credit. Auto loan originations totaled $229 million for the quarter, down 60% compared to the year-earlier quarter. Finance receivables totaled $10 billion at Sept. 30, the firm said.

Net charge-offs came in at 8.4% of average finance receivables for the quarter, compared to 7.3% for the quarter ended September 30, 2008. Loan delinquencies at least 31 days old totaled 11.4%, compared to 10.4% in the prior quarter.

The company said it had total available liquidity of $704 million at the end of the quarter, consisting of $462 million of unrestricted cash and approximately $242 million of borrowing capacity on unpledged eligible receivables.

The numbers provide a snapshot on the state of consumer lending, especially to those with poor credit. It's an area that the big banks -- JPMorgan Chase(JPM), Citigroup, Bank of America(BAC) and Wells Fargo(WFC) -- say is still pressured by the troubled economy, even if there are signs of improvement.

"We had a solid September quarter. Credit metrics reflected typical seasonal decline and the impact of a decreasing portfolio balance. However, we are seeing a moderation in the rate of deterioration in our credit performance," CEO Dan Berce said in a statement on Wednesday. "With ample liquidity, sufficient warehouse capacity and an improving capital markets environment, we are well-positioned to rebuild loan origination levels."

AmeriCredit is one of the few public companies that specifically targets the subprime automobile loan market -- a niche that came under great pressure during the housing downturn. The company says it generally charges higher interest rates in order to serve this lower credit market. It acknowledges it experiences a higher level of credit losses than other auto financing companies as a result of its concentration on subprime, and relies on securitizing auto loans to obtain funding.

The freezing conditions in the credit markets, especially after Lehman Bros. sank into bankruptcy, were difficult for the company, and it was virtually impossible to securitize any loans during the worst days of the financial crisis. Although the credit markets have since improved somewhat in the past year, it's mainly because of federally-backed programs priming the pump to get credit flowing again.