Credit Acceptance Corp. of Southfield, Mich., announced lower first-quarter net income and said it is taking a more conservative approach to bruised-credit used-car lending.
Net income was $6.9 million or 15 cents a share, down from $12 million or 26 cents a share a year earlier. Revenue was $39.3 million, down from $41.8 million.
Expenses for salaries, wages and general and administrative expenses were sharply higher in the quarter, at $12.1 million, up from $8 million a year earlier.
However, fewer loans allowed Credit Acceptance to post a lower provision for credit losses in the quarter, at $5.8 million, compared with $7.1 million a year earlier. Credit Acceptance originated $203 million in new installment loans for the quarter, down from $291 million a year ago.
The company also announced that it is selecting a new accounting firm following the end of its relationship with Arthur Andersen L.L.P.
Credit Acceptance was rocked last October by a huge loss caused by a $60 million charge the company said was needed to beef up loan-loss reserves. Its stock, which peaked at $28.38 a share in September 1996, plunged as low as $2.50 a share.
The company's 1997 earnings statement was delayed, angry shareholders sued, and on March 11, President Richard Beckman quit.