FORT WORTH — After continuously scaling back originations and dealer partnerships to match the difficult credit environment, AmeriCredit announced a turnabout Wednesday.

Management said it's confident enough to ramp back up originations to $300 million by December 2009. To support these higher originations the company said it is looking to reactivate or sign up new dealers and add marketing representatives.

"The success of our July securitization and resulting pay-down of our Master Warehouse facility provides us the confidence to raise our originations targets while staying comfortably within our current funding capability," explained Dan Berce, president and chief executive officer, in a conference call on fiscal fourth-quarter results Wednesday.

"Our goal now is to gradually increase originations to at least $300 million per quarter by December 2009 with continued incremental increases through the end of calendar 2010," he continued. "The increase in originations will help us maintain scale and arrest the runoff of the portfolio."

Keep in mind that the new origination level, while up from $175 million in the June period and $210 million in the March quarter, remains down from quarterly origination levels in years past. For instance, during the same quarter of last fiscal year, originations stood at $780 million. However, it shows that the company is seeing an easing, perhaps, in the credit markets and economic pressures on business in the relative near future.

"We also plan to modify credit standards where appropriate, including marginally lowering credit-score cutoffs in geographic regions that have demonstrated consistent or improving credit performance in recent months. We have not and do not plan to ease key underwriting standards, such as loan-to-value ratios and verification requirements," Berce highlighted.

"Additionally, we will continue to balance credit risk and pricing on new originations to achieve appropriate risk-adjusted returns, but we do not expect to seek additional pricing increases as we expand origination levels," he added.

Supporting this move are several factors, including the fact that the company successfully executed a subprime securitization in July, which officials said "garnered significant interest from investors," leading to every note-series being oversubscribed and allowing the company to increase the size of its offering and tighten the pricing of the transaction.

"More importantly, we were able to place the subordinated bonds, which were not TALF-eligible, with primarily traditional securitization investors at an acceptable price," Berce pointed out.

"Given the volatile and often-frozen capital markets we faced over the past 12 months, the fact that we have been able to issue over $1.7 billion in securitization notes over such time reflects positively on the viability of our funding platform," he mentioned.

Additionally, net credit losses remained relatively high at 7.1 percent for the June period, albeit down compared with 7.8 percent for the March quarter, but up from 5.9 percent for the June quarter of last fiscal year.

Despite these relatively high losses, in a turn, the company benefited from better recovery rates on repossessed collateral. The quarterly recovery rate came in at 42.1 percent, up from 39 percent in the March time frame and a low of 37.1 in the December 2008 quarter.

"Looking ahead, we expect recovery rates to remain stable, subject to normal seasonal weakness in the September and December quarters. One final note on vehicle values: We have not seen and do not expect to see any significant impact from the changes that are occurring at General Motors and Chrysler," Berce explained Wednesday.

Also, AmeriCredit posted 31- to 60-day delinquencies of 6.9 percent, compared with 6 percent last quarter and the prior year. Meanwhile, accounts greater than 60 days delinquent came in at 3.5 percent, compared with 3 percent at March 31 and 2.9 percent in June of last year.

And while management said it recognized that gross default levels may continue to increase due to the economic weakness and unemployment levels throughout the country, in addition to also predicting "exacerbated" pressure on portfolio performance metrics as the portfolio continues to runoff, the team forecasts that its net credit loss rate will peak in the December quarter.

"By March 2010, the majority of our 2006 and 2007 vintage originations, which have been most affected by this downturn and comprise approximately 60 percent of the current portfolio, should be past their peak loss period and we anticipate that we will see better credit performance overall as our more recent originations become a greater part of the overall portfolio," Berce said.

Also talking on Wednesday was Chris Choate, chief financial officer, who outlined some of the challenges the company will face going forward.

"First, as we head into our seasonally weaker September and December quarters, we expect that most of our 2006 and 2007 securitizations will breach performance triggers and begin to trap cash to build to higher credit enhancement requirements," he said.

"While we expect the cash we receive from our securitization trusts to be reduced by approximately half over a period of several months, we will continue to receive cash distributions from performing securitizations because our securitization transactions are not cross-collateralized," Choate further explained.

Getting into numbers, the company said it posted a net income of $31 million, or $0.23 per share, for its fiscal-fourth quarter ended June 30, 2009. It reported a net loss of $150 million, or $1.30 per share, for the same period a year earlier.

For the fiscal year, AmeriCredit reported net income of $14 million, or $0.11 per share, compared with a net loss of $69 million, or $0.60 per share, for the previous fiscal year.

The net loss for the quarter and fiscal year included a $135 million after-tax impairment charge ($213 million pre-tax), or $1.17 per share, related to the write-off of goodwill recorded in connection with the acquisitions of Long Beach Acceptance Corp. and Bay View Acceptance Corp.

Managed receivables totaled $10.93 billion, compared with $14.98 billion at June 30, 2008.

The company had total available liquidity of $483 million, consisting of $193 million of unrestricted cash and approximately $290 million of borrowing capacity on unpledged eligible receivables.

Looking ahead, Berce said, "Notwithstanding these positives, for several reasons, we do not expect the level of earnings we achieved in the June quarter to be sustainable throughout fiscal-year 2010. First, as our portfolio continues to runoff in fiscal year 2010, our top-line revenue will decline. Second, increase loan production will drive higher upfront provisioning consistent with our loan loss allowance methodology, which captures 15 to 18 months of expected net credit losses in the quarter loans or origination.

"And third, we expect our operating expense ratio to increase modestly as we grow originations and lose some scale with the ongoing decline in the size of our portfolio," he related.

Basically, Berce concluded by saying the company is cautiously optimistic about the future and expects to grow its share of the subprime auto finance space in fiscal-year 2010.