FOOL CONFERENCE CALL SYNOPSIS*
By Greg Markus (MF Boring)

GREEN TREE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GNT)") else Response.Write("(NYSE:GNT)") end if %>
1100 Landmark Towers
St. Paul, MN 19090
(612) 293-3400

ANN ARBOR, Mich., October 22, 1996/FOOLWIRE/ -- Green Tree Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNT)") else Response.Write("(NYSE: GNT)") end if %> reported EPS of $0.61 for the 3Q ending September 30, 1996. That represents a 20% increase over the year-ago quarter, a 13% sequential gain over the last quarter, and a record quarterly result for the company. The mean of analysts' estimates for the quarter was $0.61 EPS, with a range of $0.58 EPS to $0.65 EPS.

LOAN ORIGINATION BREAKDOWN. Total retail loan originations in the quarter increased 38% to $2.173 billion, with increases in all segments. More than one-third of the loan volume came from segments outside of Green Tree's core manufactured home loan business. Commercial loan originations were $804 million for the quarter, nearly double last year's third quarter and an increase of 7.8% over the second quarter of 1996. At the end of third quarter, Green Tree's total loan portfolio value stood at $18 billion.

SECURITIES SALES DURING THE QUARTER. Green Tree completed five public sales of asset-backed securities during the quarter, totaling $2.3 billion, with three transactions backed by manufactured housing loans, one by home improvement and home equity loans, and one by consumer product and equipment loans.

ACQUISITION OF MDS OPENS UP EQUIPMENT LEASING BUSINESS. In the conference call with analysts this morning, the company elaborated upon its newly-announced acquisition of Finova's MDS operation, which arranges leasing and financing on such products as telecommunications equipment, computers, office equipment, commercial laundry equipment, and auto diagnostic machines. Although the equipment leasing field is a new one for Green Tree, the company sees it fitting well with its rapidly growing commercial finance and private-label credit card businesses and envisions many possibilities for cross-selling synergies. As the company noted in the conference call, Green Tree wants to offer "one-stop shopping" to serve the financing and leasing needs of its commercial customers.

ECONOMICS OF THE MDS PURCHASE. Green Tree is buying MDS for just under $600 million, which represents approximately a 10% premium to MDS's book value. MDS currently has $350 million in leases and had been projected to grow at a rate of 15-20% annually. Green Tree said, "We think we can add to that." Green Tree expects the acquisition to be additive to earnings next year. The company plans to securitize the income stream from the leases, as it currently does with its loan business. It is possible that Green Tree may be able to offer for sale securities backed by the MDS leases before 1996 concludes, but first quarter of fiscal 1997 is more likely. The typical spread on MDS's business averages 700 to 750 basis points -- "very good," according to Green Tree.

PROVISIONS FOR LOAN LOSSES AND DELINQUINCIES. Provisions for losses on loans increased in percentage terms over the year-ago quarter due to the changing mix of loans and the longer terms of larger loans for manufactured home financing. Those provisions for losses were down slightly in percentage terms from last quarter, however. The company noted that loan delinquencies and prepayments are in line with the company's projections and its actu"arial, helvetica" models have not changed. According to the company, "The markets for our products are very strong, and everything is in accordance with projections." The loan delinquency rate is approximately 2.10%, which is above the 1.94% value reported as of June 30, 1996. The company said that this remains within the bounds of their financial models.

LEVERAGE ON THE LOAN PORTFOLIO. The costs of servicing the loan portfolio has increased slightly percentage-wise, in part because of the new business segments that Green Tree has initiated recently. The company expects that as servicing operations become more centralized and as they gain experience in the new segments, those costs should come down. The company said they expect that "revenues will grow faster than expenses next year." In contrast to the tightening of spread that occurred in second quarter as interest rates rose faster than Green Tree could securitize its portfolio, spreads in third quarter improved. Spreads on the last two offerings were 3.27% and 3.12%. Earlier this year, the spreads were under 3%.

MANUFACTURED HOME LOAN ORIGINATION GROWTH. Manufactured home (MH) loan volume grew at a 14% rate in 3Q:96, down from the 20%-plus level of some previous quarters. The hurricanes in the Southeast impacted the MH business to some degree. In recent quarters, however, the company had said that the 20% rate was not sustainable and that this was part of the reason for expanding into new segments.

NEW BUSINESS GROWTH. Those new businesses are more than making up for any slowing in the MH loan segment. In particular, the home equity loan division, which commenced operation in February 1996, did $238 million in business in third quarter, up 60% sequentially over second quarter. The company expects to have "a huge year in the home equity business" in 1997. The private-label credit card business (with hardware and home improvement centers, such as Menard's) is another example of a growing new segment. Green Tree is ramping this business up cautiously, however, because it is not interested in moving down the credit-quality ladder to gain new customers. The company expects two or three additional credit card deals to close this year.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.