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American General Finance: one of the country's largest consumer-credit companies.

Since its founding in 1920, the company now known as American General Finance has been on a steady roll. Still headquartered in Evansville where it began, the company founded as Interstate Finance and later known as CrediThrift has been targeting a financial niche often overlooked by banks.

American General Finance has made its niche in 39 states by loaning relatively small amounts of money--generally $1,500 to $5,000--to a whole lot of people. Last year, that meant 2.3 million families.

And it has been doing its job well, especially since 1982, the start of a tremendous growth spurt. In 1992, the company celebrated a record financial year, with operating earnings of $161 million, up 18 percent over 1991, the previous banner year. The earnings came from $1.17 billion in revenue.

American General Finance's assets exceeded $7 billion, with finance receivables topping $6 billion. Its other core business besides making loans--insurance--also has enjoyed a surge. Last year was the company's best for net written insurance premiums, up 21 percent to $131 million.

Its third base, the More Card, now is ranked in the top 50 among issuers of Visa/MasterCards nationwide. Outstanding balances for the credit-card division in 1992 were $374 million, up 5 percent from year-earlier figures.

American General Finance is a subsidiary of giant American General Corp. of Houston, one of the country's leading providers of retirement annuities, loans and life-insurance products. The Evansville company was known as Interstate Finance until 1967, when it became CrediThrift. American General Corp. acquired CrediThrift in 1983.

Though the parent company is huge--with assets of $40 billion--the subsidiary has a decidedly different emphasis. Its operations, however, account for 26 percent of the parent's business segment earnings.

The company, headquartered in an office complex in downtown Evansville under the direction of Daniel Leitch III, president and CEO, has 7,300 employees nationwide. It started 73 years ago to underwrite sales of the Inland Motor Truck Co. in 1920. In 1928 it issued its first consumer loans. A year later it started writing credit-related insurance.

And there's been no looking back. There have been a series of rapid expansions of the company's business ever since, tied somewhat to a number of acquisitions. It bought Evansville Morris Plan in 1943, Merit Life Insurance in 1957, Morlan Pacific in 1971, General Finance in 1983 and Manufacturers Hanover Consumer Credit Division in 1988. Two more acquisitions were completed last year: Provident Financial Corp. of South Carolina and Credit Centers Inc. of Mississippi.

Leitch says it all fits into the company's strategy, albeit an unusual one. When other companies are streamlining operations and closing outlets, American General Finance is opening more. In 1982 the company had 537 branch offices. Today it has 1,274 in more than 900 communities, making it the largest consumer-credit operation in the country in terms of number of branches.

"When other companies are cutting back on brick and mortar--so to speak--we're embracing that approach," he says. American General has a personal touch to lending money, unlike larger financial institutions. Its offices are smaller, staffed by empowered branch managers and credit counselors.

"We like to call it a high-tech, high-touch approach," Leitch says. Chances are there's a branch office nearby--there are 74 in Indiana--where employees know their customers and offer them personal consumer services.

The typical customer is a blue-collar service worker, age 25 to 45, who earns less than $50,000 and perhaps has "imperfect" credit, or more likely buys something at a retail outlet and opts for in-store credit or a "same-as-cash" plan. Other loans also are offered, ranging from home mortgages and home equity lines to secondary auto financing and revolving lines of credit.

The retail sales segment of the business, in cooperation with retailers, is growing so fast that the company has set up an "after hours" credit-approval team working evenings and weekends at headquarters. Armed with more than a dozen fax machines, these agents approve credit applications in a few minutes for waiting retailers across the United States. The completed application is faxed back to the retailer and the customer takes his or her goods home right away, often with a 90-days-same-as-cash option. Many of those agreements end up being installment loans.

"It's experiencing tremendous growth," Leitch says, noting that offering instant credit approval means more business for retailers of appliances, electronic equipment and other products, which in turn means more business for American General Finance.

The company's success is aided by its regional diversity. Having operations in 39 states helps insulate the company from regional influences of the economy.

The More Card, launched in 1984, is another part of the success story. The card is issued through the American General Financial Center in Utah, and is serviced at the Card Services Division in Evansville. In addition to the Visa/MasterCard program, American General Finance also offers private-label credit cards for retailers nationwide. That new private-label business generated year-end outstandings of $114 million from 18 merchants. More importantly, it gives the company more customers to which its other products can be offered, including insurance.

Sales of American General Finance credit insurance were up 21 percent in 1992, to $131 million in net written premium. Selling insurance to credit customers is a natural mix and one that has been profitable for the company.

Life insurance in force at the end of last year totaled $4.4 billion. The company's two main insurance subsidiaries, Merit Life Insurance and Yosemite Insurance Co., both hold A+ ratings from A.M. Best.

But American General Finance isn't resting this year. Leitch predicts 1993 will see an average of 10 percent growth in assets and a 15 percent increase in operating earnings for the finance division.

That might even be a conservative guess. For the first quarter of 1993, American General Finance's operating earnings were up 36 percent over the record earnings of 1992. According to Leitch, "growth in operating earnings was the result of improvement in all aspects of our business, including receivables growth, yield improvement, increased insurance revenue and improved credit quality."

Net finance receivables totaled $6.1 billion, up 8 percent from a year ago. The company's insurance revenues were up 27 percent for the quarter. Earnings were up 16 percent.

Although the company's business is expanding across the country, there's been no talk of leaving Indiana or Evansville. The company says it's been treated well in Evansville and the central location of the company headquarters helps the company's business operations. Among the natural benefits is the fact that Evansville is in the Central Time Zone, which gives workers a chance to talk to people on both coasts during the course of the business day.
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Title Annotation:American General Finance Corp. in Evansville, Indiana
Author:Derk, James S.
Publication:Indiana Business Magazine
Article Type:Company Profile
Date:Jun 1, 1993
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Next Article:The corporate image.

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