Magazine article American Banker

Money Store Opening Eyes on Wall Street

Magazine article American Banker

Money Store Opening Eyes on Wall Street

Article excerpt

Money Store Inc. is producing a wow effect on Wall Street.

In the last two-and-a-half weeks, the Sacramento, Calif., lender's stock has skyrocketed about 36% to around $50 - an increase of more than $13.

Analysts said the July 26 announcement of better-than-expected earnings in the second quarter had generated a buying frenzy on Wall Street.

Last quarter was a watershed for Money Store, which originates home equity, small-business, and student loans.

It also may be a watershed for other finance company stocks, which could ride the coattails of Money Store shares, some analysts believe.

"It really was one of those quarters that you stand back and say 'wow,' " PaineWebber Inc. analyst Gary Gordon said of Money Store's earnings.

So far this month, prices for stock in other finance companies have remained relatively flat.

Mr. Gordon said Money Store showed a growth level expected more from companies such as Microsoft Inc., the computer software giant, than from a finance company.

Money Store earned 79 cents a share in the second quarter. Analysts had expected earnings of about 60 cents a share. Its net income rose 54%, to $10.8 million.

Loan originations reached $853 million, up 37% from the year-earlier period. In a press release accompanying the earnings announcement, Money Store president and chief executive Marc Turtletaub attributed the increase to strong growth in home equity lending.

Mr. Turtletaub is the son of Money Store's founder, Alan Turtletaub, considered one of the most original thinkers in the finance business.

The company earned $77 million from loan sales. That's about $10 million more than some analysts expected.

"These guys have done an outstanding job executing the plan," said Jeffrey C. Villwock, a partner at Johnson Rice & Co., New Orleans.

Money Store's success is all the more remarkable because it comes in the face of burgeoning competition in the home equity market. …

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